Popular posts from this blog

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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Markets Dont Trust Trump

It was an interesting finish to Friday; some indices successfully tested their 20-day MAs - others did not. Pure technical traders could have taken a pop on Friday in the Russell 2000 ($IWM), and equal-weighted S&P ($SPXEW) at their 200-day MAs, knowing that other lead indices were undercutting their 200-day MAs, but it would be a big ask in the age of Trump (unless you were insider trading). Well, markets reacted positively to the announcement that Trump wasn't going to bomb Iran's energy infrastructure, but over the course of the day the majority of market participants didn't believe him, and sellers returned in force.

The Russell 2000 ($IWM) managed a picture perfect tag of the 200-day MA on Friday, but on Monday, the higher volume accumulation racked up by the close of business came with a sizable inverse spike.

The S&P lost its 200-day MA during the middle of last week, and early buying on Monday looked like a recovery of the 200-day MA was going to happen. However, by the close of business, the index reversed its gains and undercut its 200-day MA once more. This is bad news for bulls.

The other side of this was the equal-weighted S&P, which closed Friday bang on its 200-day MA - rallied - and actually managed to not leave to large an overhead spike. It's a buying opportunity for a bounce, but a bounce which is likely to struggle once it gets to its 20-day MA.

The Nasdaq went a step further than the S&P and Russell 2000, undercutting not just its 200-day MA, but its trading range too. The loss of the November swing low initiated a new bear market for the index. Technicals are net negative, and the index is starting to underperform against the Russell 2000. Bad times ahead for this index?

Not helping is the failure of the Semiconductor Index to push above its 50-day MA. Technicals are mixed, but price action is shifting bearish. If there is a loss of 7,450, then shorts can be expected to pile in and drive things towards its 200-day MA.

The Dow Industrials has yet to undercut its November swing low, but its treading on thin ice. The 200-day MA has been lost on net bearish indicators, and Monday's spike high shows supply is not too far away. If the Dow gives up 45,500 support it will start a new bear market for the index.

Despite all of this, bulls have one asset that is moving in their favor, and that's Bitcoin. The cryptocurrency has successfully defended its 50-day MA and today's gain sets up for the development of a right-hand base.

This week will be interesting. Trump's TACO decision is one markets are not expecting him to keep. Iran has little to lose by extending this war given neighboring countries have far more to lose (Iran having already lost so much already). The US has minimal physical vulnerability, and Israel has the means to defend itself, so there is little incentive for either of them to stop. In the middle of this, Arab nations will have decisions as to who to align with long term. If the US is unable to defend them, will they continue to host US bases? Will they move to appease Iran? What are the long term vulnerabilities to Israel from such (well funded) Arab nations experiencing the physical and economic brunt of this war? Markets are only *starting* to shape a new bear market, so the next question is whether this will be a bear market driven by a broader war in the Middle East.

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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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