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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 Shapes Bullish Handle As Bitcoin Continues To Advance

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 breakout gap. As with the S&P, there hasn't been sufficient consolidation to take out the early profit takers. The relative performance of the index to the Russell 2000 has been shifting back and forth throughout 2026 - its currently outperforming, although I think this may be better news for the Russell 2000 in the long term.

Semiconductors have reached what looks like the last measured move target from the swing low in November 2025. Given the rate of acceleration, it's hard not to expect a level of selling that could cause panic for those who bought Semiconductor stocks on Friday. For me, I see the first stable support at 8,500 and little else besides.

In contrast, the equal-weight Nasdaq 100, has only just broken above its 200-day MA as of Friday's close, although technically remains strong. For comparison, the Semiconductor Index is 48% above its 200-day MA.

Bitcoin continues to behave well and has been making steady progress back to its 200-day MA, which is likely to be the first point of contact for profit taking.

Markets are doing what they do despite the Iranian war and hefty tariffs. I do have concerns above the Semiconductor Index (and associated indices) which can't keep posting an endless sequence of white candlesticks, but Bitcoin and the Russell 2000 are behaving solidly and show no reason to be bearish.

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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

Markets Dont Trust Trump

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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.
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Sellers Accelerate Action As Confirmed Distribution Kicks In

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Aside from Bitcoin, we are not seeing too much technical damage, but we are seeing a pick up in the volume of seeling. Moving averages will be key in the near term before we have to start looking at horizontal price support and swing lows. The Russell 2000 ($IWM) undercut its 20-day MA, but hasn't yet challenged support defined by the December swing high. The MACD is on a 'sell' trigger and +DI/DI and On-Balance-Volume will likely do the same Monday if selling continues. Friday's selling registered as confirmed distribution, which is a worry for Monday. It's the strongest index, but if this falls under $257 we would likely be looking at a new trading range bound by $245 and $270 that could last a number of months.
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