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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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Bitcoin Successfully Tests 50-day MA on Bullish Hammer

Bitcoin is holding to a bullish setup with a nice looking bullish hammer/doji on the 50-day MA. When we look at reversal candlesticks we want to see these occur when momentum is oversold; and in the case of a bullish trend, this oversold state occurs at the midline (50), not sub 20. Bitcoin had suffered heavy selling to bring it to July lows, and while action since then has been a little scrappy, I still like bullish trades, particularly long term (6 months+).

The equal-weighted S&P broke to new highs in a decisive move. There was a new strong 'buy' trigger in the MACD (above the bullish zero line), with a sharp rise in relative performance over the weighted S&P.

You wouldn't really have noticed the breakout in the parent S&P. Yes, there was a gain, but it's lost within the bounds of the May-July trading range. Also, there was no new MACD 'buy', although stochastics have moved below the critical 50 midline. There was a new 'buy' signal in On-Balance-Volume and relative performance has accelerated sharply from its Spring period of underperformance. The trade favors bulls despite the mixed technical picture.

The Russell 2000 ($IWM) spent a fourth day at its 50-day MA. It closed with a small doji on the moving average, with short term stochastics just above an oversold state. Other technicals are bearish, but the index is outperforming the Nasdaq. Here too is a buyers trade.

THe Nasdaq has dropped below 25K support with a small doji, marked with higher volume distribution. Other technicals are bearish. If this is to be a bullish signal (and therefore a bear trap), then buyers need to step in tomorrow to take this above 25K.

We still have bullish setups across indices across Bitcoin, equal-weighted S&P, and Russell 2000. News has focused on Semiconductors, but Fib retracements show we haven't even reached the first support level. Expect further losses, but these losses remain in line with a bullish setup.

For now, indices stick with bullish setups.

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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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