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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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Scrappy Support Holds For Indices As Bitcoin Trades Near 50-day MA

Summer trading dominates as indices trade near support levels while Bitcoin comes back off June highs.

The equal weighted S&P recovered 8,600, returning its outperformance to the weighted S&P, a better scenario for the long term health of the S&P (weighted or unweighted). The recovery was enough for it to poke its head above its 20-day MA. The MACD continues to decline from its weak MACD trigger 'sell' but a couple more up days may be enough to see a new, strong 'buy' signal. Aggressive buyers could look to get in here to pre-empt this signal; a stop goes on a loss of 8,560.

The S&P posted a second doji in a row following a gap down from a 'bear flag'. Given action in the equal-weighted S&P there is a reasonable change for gap higher and a move back to 7,600; look to premarket for leads. The index is increasing its outperformance relative to the Nasdaq.

The Nasdaq struggled to get above its 50-day MA and is currently trading below its 20-day MA. It now finds itself back at $25K psychological support (also a double wing low in June) in what looks like a larger move towards its 200-day MA (as triple bottoms are rare), but if you want an aggressive buy, then there is one from Friday's close.

The Russell 2000 ($IWM) has been the relative outperformer to the Nasdaq and S&P over the course of the summer, but it has been drifting lower since the June peak. It's testing the 50-day MA after weeks of declines. There is a buying opportunity as declines have been modest. If we see buying action in the Nasdaq and S&P, then there is a good chance for a carryover trade in the Russell 2000 with stops on a loss of the 50-day MA.

Bitcoin may take a little longer to get its right-hand-base to take shape. It rejected its first move to get past 67K but with the 200-day MA coming back to current price it will add another incentive to get buyers to jump in again. Technicals are net positive and momentum has only just dropped out of an overbought state. This is long term bullish despite the extended weakness that brought the cryptocurrency to this point.

We haven't seen an extended period of buying since April, but we should be seing another period soon and tomorrow offers buying incentives for those willing to take them (and manage their risk).

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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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