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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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Gap Down Selling Threatens Breakdown Across Indices

After yesterday, I was looking for big red candlesticks across indices, and today - they delivered. Those who took the opportunity to go short can place a stop at yesterday's close.

The Russell 2000 ($IWM) experienced a higher volume distribution day on net bearish technicals. Today's loss finished on $245/6 support, but another day's worth of selling will open up for a test of the 200-day MA and maybe a potential follow through move down to $228.

The equal-weighted S&P is back down at 7,800 and it's looking like further losses are on the cards. The 200-day MA should be an initial test, but a measured move target would open up 7,400, that is also near the November swing low. Convergences are good, unless you are a bull.

The S&P is testing its 200-day MA on a nasty sell off. The best case scenario is a spike low, so if this sells off in morning trading but starts attracting buyers after lunch, then it may be worth a long trade - particularly if we get a spike low and a close above the 200-day MA.

Same applies for the Nasdaq.

Although I was disappointed with Bitcoin as I really was expecting some sizable upside follow through, instead, we got a red candlestick that threatens to undercut the steady work buyers had clocked in the past couple of weeks. This may morph into a scrappy base that could last months, which at best, is a hold.

The index to watch is the Dow Industrial Average. The index was the first to undercut its 200-day MA, which is warning for indices currently testing their 200-day MAs. Watch what happens tomorrow. If we are to see spike lows for indices testing 200-day MAs, then this has to make a comeback tomorrow.

If there is a shorting opportunity to look at, then it could be Semiconductors. A bearish cloud-cover candlestick at converged 20-day and 50-day MAs, with a couple of spike high doji last week (denoting supply), on weak technicals, says short...

With the war in Iran not looking like it will finish soon, traders are now having to position themselves for the long haul, and that appears to be from the sidelines.

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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

"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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Markets Rally But "Bull Traps" Hold For S&P and Bitcoin

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Markets were able to stage a recovery after Tuesday's losses, but the recovery - while newsworthy - didn't do enough to make back all of those losses, and critically, there is still a key "bull trap" in the S&P. Technicals are still mixed for this index, with momentum (stochastics) failing to return to an overbought condition, a condition required to sustain a rally.
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