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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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When News and Technicals Combine

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.

The S&P breakout included a MACD trigger and On-Balance-Volume 'buy'. Today's bullish 'hammer' marked buyer interest on the retest of support. If there is bad news from Iran then we need to consider the possibility of a 'bull trap', and with the index below the 200-day MA it could prove to be an ugly day. Note the measured move targets (red arrow).

The Nasdaq finished bang on resistance in what could be a picture perfect short. We have intermediate stochastics back on the midline, with price at declining resistance and 20-day MA, with the 200-day MA overhead, and a 50-day MA moving towards a "death cross". On the bullish side, we have MACD and On-Balance-Volume 'buy' triggers, on higher volume accucumulation, and bullish 'hammer', but a single day's selling on bad news is likely to undercut the 'hammer' low. Buyer beware.

Bitcoin has edged higher, but we are still awaiting the acceleration from the development of a right-hand-base. But the longer this basing goes on, the better long term investment this becomes, even if this asset reacts negatively to Iranian news.

The Dow Jones Industrial is at its 200-day MA with a series of spike lows denoting demand, although technicals are more bearish. On positive news, the 'bear trap' is well established and is typically a strong reversal signal. So, even if there is sell off tomorrow, it would take a few days worth of weakness to negate the 'bear trap'.

We will know in the next few hours what Trump has in store for Iran, but for markets, the S&P Investor Survey suggests we are in a 2022 scenario that could see bearishness extend into this year's election.

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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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