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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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Equal Weighted S&P Surges as Russell 2000 Bounces Off Support

With the tech sell-off clouding action in the S&P and Nasdaq we have to look elsewhere for positivity. And there is no lack of alternatives. The equal weighted S&P kicked on from its 'bull flag' breakout, posting a new high, and is well away from key support of 7,800 - meaning it has room for maneuver should tech weakness expand.

Compared to the regular S&P - which is stuck inside a narrow range because of the weighted tech stocks - but not collapsing in a manner which was anticipated, leaving it in no-mans land for now despite Friday's big gain. For next week, the battle lines are 6,790 and 7,000. Anything else is just noise.

The Nasdaq had a trendline break, but like the S&P, it's really in trading range marked by 22K support and 24K resistance. Technicals are net negative and the index has been underperforming the Russell 2000 ($IWM) since last November.

The equal-weighted Nasdaq 100 told a differnt story as it lost November swing low support having undercut its 200-day MA earlier during the week. Technicals are net negative, but the equal weighted comparsion to the S&P has fallen off a cliff since the start of the year. There is only one game in town, and it's not the Nasdaq 100.

It has been easy to blame Semiconductors for losses in tech stocks, vut this index is still performing quite well.

Bitcoin has really suffered a fall from grace and it came very close to its measured move target. Watch for a retest of $60K, this might be the buying opportunity for those looking for the value trade. Last week's trade volume had the hallmarks of a capitulation. Technicals are net bearish but are working their way out of a deep oversold state.

The other index that is giving bulls a nice trade is the Russell 2000 ($IWM). There is no fanfare, just steady gains. Technicals are mixed given a MACD trigger 'sell', but other indicators are in a good place and the index is enjoying a relative period of outperformance (vs Nasdaq and S&P).

Honorable mention to the Dow Industrials. If you are looking for a safe pair of hands then this is the index. A near perfect 45 degree trend, solid accumulation trend, net bullish technials, and a new MACD trigger 'buy' signal. Nothing not to like here.

There is some nice positivity bubbling under the surface when you look beyond the AI Tech stocks. I still want to see a test of 200-day MAs for these indices, but there may be a relataive seamless transition to new sectors that may delay that for another few months.

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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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