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

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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...
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New Thresholds Established As Russell 2000 Pressures All-Time Highs

The volume wasn't great, but the Russell 2000 ($IWM) is again challenging $252 resistance as sellers seemed reluctant to take profits. We may see volume if $252 is breached, but it's got to get there. The other beneficiary was Bitcoin ($BTCUSD), it was struggling a little but is now challenging the last swing high.

The Russell 2000 ($IWM) has returned to an overbought state with the MACD above the bullish zero line. The index has outperforming the Nasdaq since bouncing off November lows. Breakouts come from an overbought state and the technical picture now is better than it was in mid-October, the last time it was challenging $252s.

The Nasdaq posted a small gain, but it still has a way to go before it challenges the October high as the Russell 2000 is doing. Technicals are net positive, but there is still a bit of an AI hangover to overcome.

Bitcoin ($BTCUSD) had generated a solid bullish reversal spike at $80K in November, but has stumbled a little in the bounce - at least until today. There may be a small day-trade to the 50-day MA, although long term investors could be buyers here - although as a long term investment I'm not entirely won over by cryptocurrencies (but Bitcoin would be the best of them).

The S&P is similar to the Nasdaq. Shorts could still run a trade here with a tight stop above 6.9K. Technicals are net bullish, although they are in a little better shape. The index is underperforming peer indices, and is the "weakest" of the group.

There is a buying opportunity in the Russell 2000 given the relative neutrality of the Nasdaq and S&P. If Bitcoin is able to challenge its 50-day MA it will offer a trading opportunity in the Nasdaq to make new all-time highs. If there is a breakout in the Russell 2000 ($IWM) it will quickly push the index into the 5% zone of historic price extremes relative to its 200-day MA.

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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?

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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.
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"Bull Traps" For S&P, Nasdaq and Bitcoin

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So, in one fell swoop, the S&P and Nasdaq undid all of the work of 2026 with nasty gaps lower. In the case of the Nasdaq, the ascending triangle breakout reversed into a breakdown with new 'sell' triggers in the MACD, On-Balance-Volume and +DI/-DI. The relative performance of the index to the Russell 2000 ($IWM) showed an acceleration lower after last year's declines. Only stochastics (momentum) is holding on. If one was to be more honest of what's happening, we are likely broadening out to a trading range and it will take a loss of 22K to really flag a concern for bulls. Things are a little more problematic for the S&P. There is a definite 'bull trap' in play following today's significant gap down. Volume rose in confirmed distribution, so this wasn't some fake out to get weak hands out of their positions. As with the Nasdaq, the twin lows of October/November at 6,550 carries greater significance, and we are still a long way from a test...
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