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S&P 500, Nasdaq Profit-Taking Is a Buying Chance; Russell 2000 Forms Golden Cross

Published 01/03/2024, 03:02 AM
Updated 07/09/2023, 06:31 AM

With the exception of the Russell 2000 we have the S&P 500, Dow Jones Industrial Average and the Nasdaq 100 all up near all-time highs.

There is the potential for some indexes to return double tops, particularly if you look at Monthly charts like the S&P 500.

S&P 500-Monthly Chart

Over the coming weeks, if we see the 2021 high cleared (any gain over January would be enough), then the risk of the double top abates.

Having said that, there really hasn't been any substantial profit taken from markets since the October rally.

If we stick with the S&P 500, then the 50-day MA would look to be a good place to watch for a buying opportunity should 2024 start with some profit-taking. S&P 500-Daily Chart

The Nasdaq hasn't extended itself as far as the S&P 500, so there will be more pent-up demand should sellers try to control action in this index.

There is a 'sell' for the MACD but other technicals remain healthy, and selling volume is well down on recent buying.

NASDAQ Composite-Daily Chart

The Russell 2000 ($IWM) has still work to do before it gets back to 2021 highs.

The end-of-year saw a 'golden cross' between 50-day and 200-day MAs, marking the trend reversal in favor of bulls long since achieved for the S&P 500 and Nasdaq.

As with the latter indexes, technicals are strong and selling volume has been light.

IWM-Daily Chart

Going forward, we will be looking for the October trend to continue, but not before 'weak hands' have a chance to take their profits.

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The Russell 2000 ($IWM) has the best chance of attracting buyers as the "value" index compared to the S&P 500 and Nasdaq. Let's see what happens when traders return in force.

Latest comments

Declan is one more babyboomer who never witnessed a full stock collapse, ever. One day, investors will be forced to stop looking at graphs and start looking at reality. Taiwan elections are coming up in 2 weeks. If won by the pro-Chinese candidate, China will start meddling and Taiwan chip exports will be reduced / repriced / copied to China. Taiwan will exit US influence, and the NASDAQ, heavily reliant on Taiwan, will (slowly) collapse. Worse, if the pro-independence candidate wins, China might attack Taiwan.The timing is perfect now: "defender dog" US is distracted in Ukrain and Gaza. China has invested heavily in their army and has planned such a move for years. A quick war win in Taiwan, in contrast with Russia, will show they are the new world leaders and will lift both their spirits and economy. And it will end abruptly all chip production to the NASDAQ companies. In either case, NASDAQ will lose. It was a nice last selling top at the "christmas run". Now run with your money.
i dont understand how they allow such gooofs to write here !
a 10% correction is in the cards going into earnings. we all know what goes up must bounce to go higher
As always, thank you for your work!
Thanks Declan
Stocks down is a good buying chance ......Stocks up is a good buy....... nothing is a bad investment now......
The Russell has to refinance debt this year. Germany and China are in a recession. Inverse etfs are where im staying till March when the fed prints more hope.
you are the best analyst here. i hav been following ur articles for last 2 yrs. u gave buy calls at those times whn everything looked so bearish. keep it up Sir
95 years of going straight up.  1% pullback is a huge buying opportunity!  I'm all in!!!!!!!!!!!!!!!!
i think this was sarcastic so then i'm lol :D
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