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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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Sellers Add Pressure To S&P and Equal Weighted S&P In Particular

The problem when you trade off what Trump says, is that you are only in for disappointment. Monday's reversal that delivered what should have been a tradeable bullish engulfing pattern has devolved into a distribution sell off across lead indices.

The Russell 2000 ($IWM) gapped down but was at least able to hold onto $245 support. Technicals are net negative, but not fully oversold, so I would be looking for another day of selling that should take it into a test of its 200-day MA.

The S&P broadened its losses, but it still has a few days to go before it reaches an oversold state and can start looking at a reversal. There was no confirmed distribution, but it's hard to see buyers mounting much of a defense without first testing its 200-day MA.

The equal-weighted S&P managed to undercut the Monday spike low, a warning sign for other indices yet to do so. It seems to be on course for a test of its 200-day MA. Technicals are net negative and stochastics just dropped into oversold territory.

The Nasdaq didn't experience the same degree of loss as the S&P. It also managed to successfully defend its 200-day MA. While further losses are likely, there is reason for optimism given the proximity of the 200-day MA and trading range support. Technicals are mixed, with On-Balance-Volume on a 'buy' trigger. It's an aggressive long for those willing to take a punt.

Bitcoin edged higher and has almost shifted technicals into a net bullish picture. The 50-day MA is not far overhead, and while this may act as resistance it may not do so for long. This still looks to be a workable long trade if not long already.

Another index testing lows is the Dow Industrial Average. It registered a distribution day and looks likely to test its 200-day MA tomorrow. Technicals are oversold.

On the short side, we have the Semiconductor Index. Yesterday's small inverse doji at the 50-day MA on net bearish technicals is a reversal candlestick that has the makings of more losses to come.

Today felt like the first day markets actually posted a sell off rather than some indecisive trading range action. Those that shorted the resistance test marked by February declining highs will be sitting pretty.

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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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