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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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Semiconductor Index Rebounds Off Measured Move Target

I haven't commented much on the Semiconductor Index, but yesterday brought with it a small candlestick and a gap higher that tagged the measured move target. While today saw a 3%+ loss and a potential bearish evening star. The loss came with a MACD trigger and CCI 'sell'; the MACD 'sell' faking off yesterday's 'buy' signal. Aggressive shorts could look for a test of the 50-day MA (a cover price), but in broader terms the trading range is the dominant pattern.

The equal-weighted Nasdaq 100 is the only other index on a bullish signal. Buyers were able to drive a move out from the bullish wedge to its 20-day MA. Today's action had the potential to be a rebuff from this moving average, but instead, the index was able to recover to close at the day's high. We also have a MACD trigger 'buy' and On-Balance-Volume 'buy', with the next upside target likely to be the 50-day MA.

The Russell 2000 ($IWM) remains range bound between $255 an $270. Technicals are mixed, but favor bulls. A new MACD trigger 'buy' is in the offing and this might be the cue to drive a break of $270. Today's volume ranked as confirmed accumulation, so this may be a 'sneak' long play.

The equal-weighted S&P is riding channel support and isn't suggesting any immediate weakness in the rally.

The surprise is Bitcoin ($BTCUSD). The rebuttal off the 20-day MA looked destined for an undercut of $65K, but instead, buyers stepped in and brought the cryptocurrency above its 20-day MA. Today's narrow range day effectively confirms the bullishness of yesterday's buying. The next upside target is its 50-day MA.

For tomorrow, look for long opportunities in the equal-weighted Nasdaq 100, Bitcoin and Russell 2000.

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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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