March E-mini NASDAQ-100 Index futures are called steady to higher shortly before the cash market opening. The range is extremely tight and the market is trading inside Friday’s range, indicating investor indecision and impending volatility.
There are no major economic reports today, but this is the start of earnings week. Additionally, the senate confirmation hearings for Trump’s Cabinet candidates begin this week. Trump also holds his first press conference and Obama delivers his farewell speech. Fed Chair Janet Yellen will also deliver a speech. All of these events could raise uncertainty which would make investors nervous. We’re not calling for a major sell-off, but gains could be limited.
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the previous top at 4994.50. A break back below this level will indicate the selling is greater than the buying at current price levels. It may also be a sign that last Friday’s rally was triggered by short-covering rather than aggressive buying.
The market is also in the window of time for a closing price reversal top so be careful buying strength.
Based on Friday’s close at 5004.00 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the steep uptrending angle at 5010.00.
A sustained move over 5010.00 will indicate the presence of buyers with the next target last Friday’s high at 5017.50.
A sustained move under 5010.00 will signal the presence of sellers. The first target is the previous main top at 4994.50. The daily chart opens up to the downside under this level with the next major target an uptrending angle at 4930.00.
Watch the price action and read the order flow at 5010.00 all session. Trader reaction to this angle will tell us if the buyers or sellers are in control.