Is Russell 2000 ($IWM) Ready To Break?

The Russell 2000 ($IWM) has been the index to make all the running and today finally saw some modest accumulation. The index is well set to breakout, but it's also 14% above its 200-day MA, which puts it above 90% of historic price action dating back to 1987; if it gets to $258.25 it will be above 95% of historic price action, and at $276.76 it's 99%. The last time the index did that was April 2021...

If it was to repeat the action of 2021 - with midterm elections next year (not a good time for markets) - we could see a new consolidation, possibly bottoming at psychological support of $200, but potentially lasting a few years.

The S&P edged above declining resistance and managed to stage a small consolidation. Currently, it's pushing at these local highs, but it will likely take a 'Santa Rally' before it gets to challenge all-time highs around 6,900.

The Nasdaq sits in a similar predictament as the S&P; a breakout consolidation that's ready to challenge all-time highs.

The Semiconductor Index returned to a net bullish picture after a brief switch to a bearish one. It's performing stronger than the Nasdaq, but hasn't yet challenge all-time highs. There is a risk of a double-top, but if the Russell 2000 is able to make new all-time highs then there is a good chance it too will make new all-time high.

The other asset to watch is Bitcoin. It did well to counteract the big red candlestick, and has managed to stage a bottom (of sorts), but will face its first challenge once it gets to its 50-day MA.

The metric that has been the most confusing is the AAII sentiment index. It has been zig-zagging between bullish and bearish sentiment since early summer and hasn't settled on a firm direction. If this shifts strongly bullish, we may see a rally similar to that kicked off in early 2024. But, we are heading into an election year, and 2022 was an ugly year of trading action.

Lets see what markets deliver over the coming weeks, but focus on the Russell 2000 ($IWM), as it's the index likely to make all the running. Long traders may get the most out of a Bitcoin trade.

---

Follow Me on Twitter


Investments are held in a pension fund on a buy-and-hold strategy.

Popular posts from this blog

Upcoming "Death Cross" for Russell 2000 ($IWM)

Image
There was some modest buying today from the open, but volume was light and markets are below trading range support established during the latter part of 2024. It's hard to see where the buyers are going to come from given the chaos of Trump. I should add, I listened to Josh Brown's The Compound podcast and he showed an interesting chart of market returns in April-May in the year following a strong return in markets; in essence, selling to pay capital gains tax. Given the precarious nature of markets, and the possibility for this seasonal factor to play out, it's likely we have a couple more months of downward action before value buyers return. If we look at individual markets, the Russell 2000 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
Read more

"Dead Cat" Bounce or Something Better?

Image
It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.
Read more

Sell The News. Nvidia Can't Save Market - Worse To Come?

Image
The pre-market optimism didn't last long, but when markets are coming off an extended high it's hard for buyers to return there, even off the back of 'good news'. The Russell 2000 ($IWM) opened bang on resistance at $237, and then it was all down from there. Volume surged in confirmed distribution, leaving the 200-day MA as the next logical support level.
Read more

Archive

Show more