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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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Insipid Rallies For Lead Indices After Retest Of Range Support

Not Good. Indices remain under pressure after selling into support has only resulted in a weak bounce. It won't take much to tip the S&P, Nasdaq and Russell 2000 back into the red.

The Russell 2000 ($IWM) is the canary in the coal mine. Today was a second narrow doji after Monday's. Volume was down, reflecting the disinterest by buyers. Technicals are net negative and last week's gap down has finally closed. Don't be surprised if we see a solid red candlestick before the week is out. Even if there is a rally, the 20-day MA will be there to add its own pressure.

The equal-weighted S&P is doing a little better with the rally, but given this has come off a cleaner trend break, it may find it more of a struggle to attract buyers.

The weighted S&P has been running along declining resistance since the middle of February and with the squeeze in play we will soon have a decision time with its 200-day MA. Technicals are net bearish, but there is another support level at 6,550.

The Nasdaq is also feeling the squeeze from selling pressure. It has already tested its 200-day MA, but today's doji has failed to break declining resistance. There is a 'buy' trigger in On-Balance-Volume and the MACD has flat-lined, so while bearish, there is hope - but 'hope' is never a good thing to depend on when trading. As a trade, it's an easy short, but if it can rally in the morning then an afternoon long trade might be the correct trade.

Interestingly, the Nasdaq Bullish Percents might be staging a double bottom, which might give bulls something to work with, but it will need more than a series of day-gains for this to gain traction.

Bitcoin has edged higher, holding the 50-day MA. The crypto is enjoying a series of low key gains that could be called 'modest' - not something you would ascribe to a cryptocurrency - but this is bullish.

Staying short side (with the exception of Bitcoin) looks like the trade of choice. Those looking to time a long-term investment still need to wait for a substantial undercut of the 200-day MA, and we are long way from that. If you are on the sidelines, then that's probably the best place to be at the moment.

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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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