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

Potential 'Bear Trap' in Nasdaq as Equal Weighted S&P Tests Breakout Support

Last week's winner was the equal-weighted S&P as it marked a clear breakout, but the index came back to breakout support (and stayed there) by Friday's close. The better news is the last two days have seen two doji/hammers with rebound support off the 20-day MA. Technicals have dropped out of a net bullish state with a MACD trigger 'sell'. It's a buying opportunity with a stop on a loss of Friday's low.

The Russell 2000 ($IWM) is trading around its 50-day MA in what is looking to be decent support. If there is a little red flag, it's that since the peak at $302 it has eased back on heavier distribution days with On-Balance-Volume trending down. This suggests the 50-day MA won't hold as support and there is a large chunk of space between the 50-day and 200-day MA. We have stochastics near the mid-line, which should be a rally point, but failing that, there is room to go before momemuntum becomes oversold.

The S&P has rallied back from a 'bear flag' to take the index above its 20-day and 50-day MAs. Technicals remain mixed - mostly bearish - but there is a new 'buy' trigger in On-Balance-Volume. The broader reality is that this index has been range bound since May and a gain or loss on Monday is unlikely to change that.

The Nasdaq might be the best long trade on offer. It finished last week on a 'bear trap' with a decent opportunity for a move back to 27K. Friday's doji marked indecision just below its 20-day MA, but 25K is a natural support level to measure risk:reward off. Technicals are net bearish and have moved out of an oversold state.

Bitcoin has stayed at its *200-week MA* and after coming back from 125K last year, it's now time to see buyers make a larger move higher. Technicals are mostly bearish bar a weak 'buy' in the MACD (on the weekly time frame).

Semiconductors have been the story of the week but one only has to look at the monthly chart to see how much it can fall and still be considered bullish. The first bullish fib retracement doesn't kick in until sub-10K, and we are still a long way from that.

Keep an eye on the relationship between Consumer Discretionary and Staples. When this relationship head south it's typically bad news for markets, but we can see in 2011 that a comparable scenario eventually brought with it a multi-year rally. I have drawn in a support line for this relationship. I'm looking for a break of this line, a negative impact on markets, before offering a strong, long-term buying opportunity.

For the coming week, we want to see early bullish action to confirm support, with those indices already at support offering a direct buying opportunity.

---

Follow Me on Twitter


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.
Read more

S&P Prepares For Breakout

Image
A good start to the week has left indices nicely positioned to kick on with volume rising in accumulation. Best of this is probably the S&P. Today' buying left it on the cusp of a breakout, although it wasn't enough to reverse the 'sell' triggers in On-Balance-Volume and +DI/-DI. However, a breakout would likely turn these technicals net bullish once again.
Read more

Archive

Show more