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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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Yesterday's Gains Peter Out

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.

The equal-weighted S&P tagged its 20-day MA on today's high, but technicals remain bearish. While it managed to recover its 200-day MA it's close enough to see another test as soon as tomorrow.

It had looked like the weighted S&P was about to deliver a resistance break and a possible 'bear trap'. There is still the potential for a 'bear trap', but it would need to maintain a close above 6,550 to do so; an intraday spike below this level would be acceptable.

The Nasdaq is struggling to recover its breakdown and undercut of 200-day MA. It found itself tagging 20-day MA resistance before taking a modest end-of-day reversal. A case could be made for an aggressive short with a stop on a close above its 20-day MA. Technicals are firmly bearish. There isn't a whole lot to like here.

It's a similar story for the equal-weighted Nasdaq 100, although it did stage a bounce from its measured move target. Today's small 'black' candlestick is not one to base hope on, particularly as technicals are net bearish.

Bitcoin hasn't flamed out on its latest 'buy', but it has become a scrappy affair. There is a new 'buy' signal in On-Balance-Volume and is on the verge of a new 'buy' signal in the MACD.

Best of the action may come from the Dow Industrial Average. It cleared declining resistance and left a 'bear trap' in the process. It has a similar reversal candlestick as other indices, but it has a little more to work with having successfully defended the October swing low. If it can trade sideways from here and not undercut 45.5K again it will be well placed to mount a new rally.

We have workable support for the Dow, Russell 2000, Bitcoin and equal-weighted S&P; some look better than others. There is not really a trade on offer unless some of these make a return to near yesterday's open price on an intraday spike - but you would need a solid last half-hour to suggest there was real demand lurking.

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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

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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