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

Trading Ranges Hold Despite Losses, But Breakdown Coming

We are seeing a pick up in trading volume with selling dominating, but we are not seeing a new downward trend, at least, not yet. News headlines paint a harsher picture of market action, but it hasn't borne out yet. The Russell 2000 ($IWM) has drfited towards range support on a sequence of lower highs (but not yet lower lows). I expect this squeeze to play out with a solid red candlestick breakdown (and a good short trade) with a target of the 200-day MA. This should turn technicals net negative, and then, we can start to see if a new bear trend forms.

The S&P is also testing range support, but does have the early week spike low to work with. Recent volume has been modest, although technicals are net negative - including a new downtrend in On-Balance-Volume. Moves into spike lows typically result in a loss of the spike low if the day closes inside this spike. A loss of 6,800 opens up a short opportunity with a stop on an end-of-day close above 6,800.

What might offer more guidance is the equal-weighted S&P. It established a clear trend break, followed by two successful tests of the 50-day MA. Given the frequency of the two 50-day MA tests I would not be surprised if there is a third, and on that test, the 50-day MA breaks. Technicals are mixed, but for now, one would be arguing for a trading range, similiar to the one for the weighted S&P.

The Nasdaq is holding up a little better than peer indices. Yesterday's buying volume ranked as accumulation, although the 20-day MA is playing as resistance and this moving average is fast approaching range support and the 200-day MA. This squeeze will result in a sharp break, and when it does, one can trade in the direction of the break.

Bitcoin made the initial break higher, clearing its 20-day MA in the process. It has since eased back a little but hasn't risked losing the break higher. The initial target remains the 50-day MA and then $85K, which will likely coincide with a test of its 200-day MA.

There are short trades in the making, but with markets caught in trading ranges any pre-emptive trade runs the risk of whipsaw. Longs have Bitcoin to work with, which we may be the more stable long trade.

---

Follow Me on Twitter


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

Image
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...
Read more

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

Image
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.
Read more

Archive

Show more