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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 Fresh Breakout

A quiet start to the week with only the Russell 2000 ($IWM) suggesting it could be on the move (higher). Today's action registered as a breakout, albeit on low volume, but with technicals net positive. The Russell 2000 has been outperforming the Nasdaq since the start of June, so it has the interest of market participants and is the best placed for those seeking new long trades.

Some things to watch in other indices. The equal weighted S&P continues to play out the reversal from the Tweezer Top. It's currently down at its 20-day MA with the 50-day MA and 8,320 support next on the test-list. It should see demand at the latter level should it get there.

Bitcoin is in an interesting state. It had sold off hard into the February low and this should have been the catalyst for a sustained rally. Instead, we got a low key rally to the 200-day MA before sellers returned. We now see it struggling at its 20-day MA having made an initial bounce on the February low retest. Today's inverse hammer looks like another shorting opportunity with a stop above today's high.

Semiconductors are showing another topping doji, similar to that from the end of may. Technicals are net positive. So far, these peaks haven't resulted in an extended decline, but today's finish is a marker for one.

For tomorrow, we will want to see which side of the market will win out; bulls for the Russell 2000, bears for the equal-weighted S&P. Expect the winner to influence other markets and break the bull/bear picture of the Russell 2000 or equal-weighted S&P.

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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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