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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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Sellers Appear As Support Comes Under Pressure

It was going to happen at some point but sellers have come out of the woodwork. Tech was hardest hit, but there is plenty of support for indices to work with.

The Russell 2000 ($IWM) was one of the least impacted by the selling. It staged a mini-breakout, while today's inverse hammer came on higher volume accumulation it's still in a position where it could go either way.

The equal-weighted S&P is defending the 20-day MA while the MACD holds to a 'sell' trigger. The relative outperformance of the index to the weighted S&P is a positive but the 'tweezer top' remains the dominant influence.

The weighted S&P ($SPX) is trading at its 50-day MA. The double doji on the gap down has the potential to be a bullish island reversal *if* it can gap higher. Technicals are mostly bearish, while momentum sits at the mid-point that typically marks a tradeworthy bottom. If this should undercut the midpoint in stochastics and price breaks the 50-day MA, then the next target is 7,000.

The Nasdaq sits in a similar predictament as the S&P, but it undercut its 50-day MA as selling volume picks up. Technicals are net negative, including an undercut of the stochastic midline I'm looking for the S&P to defend.

Bitcoin continues to favor the short side and a loss of 60K could see another big step lower. Technicals are bearish with the exception of weak MACD 'buy'.

The Dow Industrials are holding out on net bullish technicals, but a sequence of bearish spike highs leaves it vulnerable to selling. Should sellers attack, look for a test of the 20-day MA.

Finally, Semiconductors have left a doji 'bull trap' with 'sell' triggers in the MACD, CCI and ADX, but momentum remains strongly bullish. The index is holding its 20-day MA, but a test of the 50-day MA would be welcome at this point.

For tomorrow, interest will be on how indices defend 20-day MAs. Profit taking is likely across the different indices, but if they can stabilize just off highs it will go a long way to calm the nerves of traders concerned with the rapid pace of gains.

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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

Image
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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