Popular posts from this blog

Bulls Were Unable To Build On Morning Optimism

Image
After the Fed driven sell-off that delivered support breaks for some of the indices there was an attempt by bulls to stage a bounce, but traders weren't able to build on the sizable opening gaps, and some indices drifted lower by the close. The Russell 2000 ($IWM) lost the most ground off the open. However, today's close was enough to regain support, leaving yesterday's action as a potential 'bear trap'. Technicals are net bearish oversold. And today's buying volume was below yesterday's selling (distribution). The S&P finished the day where it started, which is also 20-day MA resistance. Aggressive traders could go with a swing trade as the next move could be sizable (particularly if the move is higher). The Nasdaq is dominated by the trading range, but within that we have a consolidation triangle. As it stands, the index is at resistance of this triangle, and given recent selling volume I would be looking for a move to close today...
Read more

Bitcoin Makes Second Attempt At Rally Off Breakout Support

The last couple of days for Bitcoin had pointed to indecision on a series of doji, but today's white candlestick above 82.5K breakout support suggests we may yet get another kick on higher. In a manner, it's a victim of its own success as market indices have headed in the other direction. On a positive note, 82.5K should be strong support. If there was a concern, it's that On-Balance-Volume is running below its 20-day MA which may suggest undercover distribution is at work; if 82.K support is lost then further loses are likely.

There are opportunities. The Russell 2000 ($IWM) has done enough to register a tag of its 200-day MA. It posted a neutral candlestick (spinning top), but it did finish with a higher close on accumulation volume. I would like to see another spike low - effectively anything that makes a quick trip below $277.30 and then recovers by the close - this would firm up a trade worthy swing low, particularly as we have had no rallies of note since the bull trap above $300. Options traders may get some reward here.

The equal-weighted S&P didn't quite make it to its 200-day MA but finished with a slightly more bullish candlestick than the Russell 2000. The index is deeply oversold on net bearish technicals, but it kind of needs another bullish candlestick to firm up a swing low.

The S&P had an interesting day. It undercut 7,650 in what looked to be a long-stop washout and finished with a (bullish) dragonfly doji, returing above 50-day MA support. Stochastics are still holding the mid-line, although it may dip below the line early next week. What I like most about this is that despite the headlines the index continues to trade above 7,600. Price action is king.

The Nasdaq is another conundrum. Yesterday, it was a clear shorting opportunity on the 'gravestone' doji that tagged the 'bull trap'. It may still be a shorting opportunity as I don't like 'black' candlesticks, but traders are defending 26,750 - and until they stop doing so, this is a long play. If you are short, I would wait to see if 27,200 was about to be breached before covering. Unlike peer indices, technicals are net bullish.

I haven't covered this in a while, but the Dow Industrial Average has been posting steady loses on net bearish technicals. The 200-day MA has converged at horizontal support, also at psychological 50K support. Today's doji came close to tagging the 200-day MA, but there is long opportunity here for a move to 52K, and maybe more.

Semiconductors edged a breakout as part of its base development. It was a relatively subtle move but with technicals net bullish it has the potential to kick on higher. The risk is a 'bull trap' over the next couple of days, which is an aggressive short. The risk is real, because a 'bull trap' would turn this ugly quick, making a test of the 200-day MA a downside target.

It's good to see trading opportunities on both sides of the fence. Investors don't have an immediate concerns, but if you need to take profits, now is not a bad time.

---

Follow Me on Twitter


Investments are held in a pension fund on a buy-and-hold strategy.

Popular posts from this blog

Bulls Were Unable To Build On Morning Optimism

Image
After the Fed driven sell-off that delivered support breaks for some of the indices there was an attempt by bulls to stage a bounce, but traders weren't able to build on the sizable opening gaps, and some indices drifted lower by the close. The Russell 2000 ($IWM) lost the most ground off the open. However, today's close was enough to regain support, leaving yesterday's action as a potential 'bear trap'. Technicals are net bearish oversold. And today's buying volume was below yesterday's selling (distribution). The S&P finished the day where it started, which is also 20-day MA resistance. Aggressive traders could go with a swing trade as the next move could be sizable (particularly if the move is higher). The Nasdaq is dominated by the trading range, but within that we have a consolidation triangle. As it stands, the index is at resistance of this triangle, and given recent selling volume I would be looking for a move to close today...
Read more

...And Then Sellers Pushed Hard

Image
I don't know if the equal-weighted S&P is a harbringer of things to come for other indices, but a second day of heavy selling has undercut the 50-day MA, and breakout support. Technicals shifted net bearish with a worrying undercut of mid-level stochastics. The next support level is down at 8,600s, but I want to see oversold stochastics on such a test. However, the ease at which existing support was lost is a concern.
Read more

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

Archive

Show more