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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 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
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Russell 2000 ($IWM) Breakdown or "Bear Trap"?

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There is an interesting setup coming for the Russell 2000 ($IWM) Today's action saw a move back into last week's breakout gap that registered as a breakdown from its narrow handle, BUT, retained the characteristics of the breakout by remaining above $270. In addition, we have a fast approaching 20-day MA that could provide a cue for buyers to step in. Technicals remain net bullish, although today's volume registered as distribution. While I tend to be a 'glass-half-full' person, I am leaning here towards a possible 'bear trap' that should resolve tomorrow; if we see buyers step in after the first half-hour of trading (when the likely direction for the market that day is established), then it might be worth a long play.
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We Have To Talk About Kevin: Consumer Sentiment

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Nothing really to add from the weekend, but the one chart that is leaving me confused is the University of Michigan Consumer Sentiment Survey. Consumer sentiment is in the toilet, really in the toilet - no surprise really given tariffs and general Administration f*ckisms - but the market has been pushing new highs rather than pivoting to new lows as has happened in the past.
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Russell 2000 Shapes Bullish Handle As Bitcoin Continues To Advance

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Indices continued to post gains but the Russell 2000 ($IWM) remains in the process of consolidation. The index is shaping a bullish handle which offers a nice risk:reward play for those looking to play the break. Volume has been light across the pattern and well below that of the March capitulation, and below even that of the early year advance. The equal-weighted S&P is attempting a 'bull flag', although it's a little scrappy. Technicals are net bullish but its underperforming relative to its weighted average and this weakness is expanding. The S&P edged a breakout of its small handle, which gives an indication that the equal-weighted S&P should follow suit on the break of the 'bull flag'. The only caveat is the edged breakout lacked sufficient consolidation to shake out the weak hands, so it leaves the move vulnerable to volume selling. The Nasdaq finished Friday on higher volume accumulation after a successful defense of the break...
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Equal Weighted S&P Primed For Breakout

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After the rejection at resistance it would have been easy for the equal-weighted S&P to come back to its moving averages. However, today's close delivered a bullish dragonfly doji, although momentum is overbought which means it's not a reversal candlestick. Given the proximity to resistance it's well placed to deliver a breakout following the lead of weighted the S&P. Technicals are net bullish, but there is still significant underperformance against the weighted average.
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Equal Weighted S&P Repelled By All-Time Resistance

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It's of no coincidence that when sellers appeared for the equal weighted S&P they did so at resistance. Today's candlestick at all-time resistance was almost a bearish enfulfing pattern with a spike high penetrating resistance. Given the weighted S&P had already broken to new all-time highs, the guidance here is for equal-weighted S&P to follow suit. BUT, if the weighted S&P undercuts breakout support to leave a 'bull trap', then much worse is likely to follow.
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Russell 2000 Delivers Breakout As Equal Weight Indices Move To Test Resistance

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Friday delivered a solid move higher across indices. The Russell 2000 had the best of the action with a breakout gap higher on confirmed accumulation. The only negative is the relative underpeformance to peer indices. It's just a question what spanner Trump wants to throw at the indices; next week could be a long week.
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Indices Test All-Time High Resistance

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It's no coincidence to see indices start to slow their gains as resistance approaches. This was best represented by the Russell 2000 ($IWM) as the advanced got squeezed and the net gain on the day was minimal (Futures suggest a modest start, no big breakout yet). The breakout could happen before the week is out, but the gap moves we have seen will act as a draw to be filled, so don't be surprised if we a move back to Tuesday's gap higher. Technicals for the index are in good shape, although volume is a little disappointing.
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Breakout Gaps Hold As Indices Approach All-Time Highs

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Markets have done well to hold the sizable gaps after version 1 of the US-Iranian ceasefire, and if there is reason for optimism, it's that markets are exepecting a version 2 of the ceasefire relatively soon(?). The Russell 2000 ($IWM) returned to a net bullish technical state as the base breakout is on the way to challenging $270. Since the test of the 200-day MA there hasn't been an opportunity for 'value' buyers to step in on a pullback. This might happen when $270 is tested.
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Markets Mark Breakout Gaps

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If you a follower of JC Parets you would be looking at a (very) bullish market outlook. I would be more cautious, but today's action has done much to negate some of the lingering bearishness from yesterday. However, markets in a trading range should be considered neutral until all-time highs are breached, but long term investors can accumulate. The Russell 2000 ($IWM) gapped higher yesterday, but closed with a bearish black candlestick. However, today's buying managed to createa a bullish engulfing pattern to negate the bearish black candlestick. In addition, yesterday's gap created an "island reversal" which is a significant (bullish) reversal pattern. Note, this gap can't close for the pattern to be true. Technicals are improving with a 'buy' trigger in stochastics to match earlier ones in On-Balance-Volume and MACD.
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When News and Technicals Combine

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So we have markets coming to (or just beyond) resistance and a Trump deadline for Iran. Consequently, we are in position to see a sizable move tomorrow. Those markets that have broken resistance are signalling towards a positive outcome (or perhaps, a kick-the-can deadline for Iran). But if news is bad and we gap away from resistance, then many markets will be back at 200-day MAs. The Russell 2000 ($IWM) is approaching converged resistance from $255, declining resistance and 50-day MA. Today's buying was on low volume, but counts as relative "accumulation" and marks itself as a possible bottom breakout.
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S&P Breakout Sets The Tone

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Markets swung back towards buyers, although there is plenty of work to do before we can call a rally. Best of the action was the S&P as it cleared declining resistance but has still to challenge its 20-day MA. There was a new 'buy' trigger in the MACD, but it's a very weak signal given the indicator is swimming below the MACD zero line.
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Yesterday's Gains Peter Out

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The positivity generated by yesterday's buying found itself under pressure today as 'gravestone doji' and 'inverse hammers' dominated. The good news was that support from weekly charts held and there is enough of a gap to offer a few days of wiggle room before sellers return. The problem is we should see selling tomorrow if these candlesticks play to form. The bearishness of these candles is negated by a close above today's highs. The Russell 2000 ($IWM) is perhaps the most vulnerable as it finished with the 'gravestone doji'. However, the recovery of the 200-day MA should give some grounds for optimism, and there were new 'buy' signals in the MACD and On-Balance-Volume. There appears to be a buyer around $243.75, so pay attention to volume action near this price level.
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