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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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S&P And Nasdaq Hang On As Russell 2000 Comes Under Pressure

Interesting times for markets this week. I'll start with the Russell 2000 ($IWM) as it finished the week with a bearish black candlestick just above trading range support. Candlestick like Friday's don't typically have a good ending, but if we some form of spike low down to $285 then I would look for a trade-worth low. Note how intermediate-term [39,1] stochastics are now oversold - another reason to pay attention to any reversal candlesticks that appear over the coming days.

The equal-weighted S&P dug in just above 8,600, although intermediate term stochatics are not quite oversold, but the two-bar reversal is a nice setup for bulls.

The S&P continues to hold support of 7,600 and its 50-day MA. Intermediate stochastics are above the bullish mid-line - which is good news if you are a bull as any such test would mark a likely successful bull-market pullback. Other techncals are bearish, but remain in a good position to recover.

The Nasdaq is caught in the middle of its trading range but is holding its 50-day MA. It's hard to know which way this wants to break. The longer term trend in On-Balance-Volume is down (distribution), which suggests a move to 25K is favored. However, if the 50-day MA holds on, then 27K is next up; measure risk:reward accordingly.

If we look at Nasdaq Breadth Metrics, we have the Nasdaq McClellan Summation Index and Percentage of Nasdaq Stocks above 50-day MA technically oversold, which can mean a support breakdown or a bullish reversal. From a trade perspective, it might be a swing trade as the next move is likely to be sizable.

Another one to watch for is the Dow Industrial Average. We have a trend break, but also a successful defense of 52K.

Bitcoin is trading at 76,700 support with a narrow range day from Friday. I'll be looking for some slippage, and then a reversal. Recent action looks like a bearish fakeout with the squeeze towards support, but lets see what traders bring to the table next week.

It's still a bit of a toss up for indices. A break of the trading range in the Russell 2000 is no guarantee the S&P and Nasdaq will fail to hold their respective support. Bitcoin is bullish even if sellers take control in early week action; the 'Golden Cross' here is significant and should be respected.

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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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S&P Prepares For Breakout

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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.
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