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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Trading Ranges Breakdown - Finally...

It was not a guaranteed thing, and if Monday sees gains (unlikely), then a bear trap can't be ruled out. It was not a wholesale disaster, but it will set the tone for the week.

The Russell 2000 ($IWM) gapped down but wasn't able to build on the opening loss. The end-of-day finish as a doji leaves it in a bit of a no-mans land, but if there is a gap higher and a closing white candlestick tomorrow, then we have a bullish morning star reversal pattern. Stochastics (momentum) is not entirely oversold, which you would like to see for a reversal pattern. Technicals are now net negative, so it does point towards further losses, but do watch for an opening gap higher that could offer a long trade.

The S&P gapped and close inside the previous spike low. This might be the most short friendly index as this level of weakness can quickly runaway once the spike low is breached (a loss of 6,700). Technicals are net negative but still a few days away from becoming oversold. I'm still liking a move to test the 200-day MA.

The equal-weighted S&P undercut its 50-day MA easy enough, but looks to have found its trading range support at 7,950. Lose this level and 7,800 becomes the next target. A narrow range day above 7,950 would give swing traders a nice setup for Tuesday.

When we look at the weekly picture we may still be on course for a slow rollover. Note how momentum is still overbought, which is still bullish despite the action we have seen on a daily timeframe. Weekly volume was down a little on last week's confirmed distribution.

The Nasdaq has been the fly in the ointment. The index most people thought would suffer on an AI-centric crash has held up relatively well. The trading range is still intact, but technicals are net negative. So, I would be looking for a loss of 22.1K, but with the 200-day MA fast approaching from below don't be surprised if we only see a spike low test of the latter moving average before buyers take this back above 22.1K for an end-of-day close.

Bitcoin gave up most of the early week gains, finishing the week with an inverse spike that marked a high degree of overhead supply, but if traders are able to finish the coming week with a close inside this spike, then I would be optimistic for future gains.

An aggressive long might be found in the Dow Industrial Average. Friday finished with a nice hammer (note how Thursday's close was inside the prior spike - hence the gap down on Friday), although technicals are not fully oversold. If Monday see's another push into the spike low, but sees a strong end-of-day finish, then it will be a long trade with risk:reward measured from Friday's low to 48K upside target.

Another decision point has opened for the Semiconductor Index. It staged a picture-perfect reversal off the January upside target, and now finds itself back at support from that early year breakout. While Friday's candlestick is not bullish, with the finish at support it might be worth a punt for longs. The net bearish technical picture suggests any bounce might not last long.

So, despite the loss of trading ranges in lead indices we are not out of long opportunities. Monday's open and the first 30-minutes of trading could dictate which way to trade; a gap down and a rally *after* the first 30 minutes would make longs favored.

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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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