The March E-mini Russell 2000 Index rallied on Tuesday ahead of President Obama’s State of Union address. Traders were apparently optimistic that he was going to say something bullish or that he was not going to say anything to bring the rally to a screeching halt.
Although today’s retail sales report is expected to show a slight decline from last month, traders are likely to focus on Obama’s call for a $50 billion infrastructure spending plan. Prices are inching higher overnight, but there is still some concern that profit-takers are waiting for the first crack in the trend to take advantage of the lofty price levels.
While it is not being suggested to jump in front of the trend, traders should be aware of the fact that volume has been low and volatility has been falling. These actions aren’t bringing conviction to the table, but nonetheless, the trend is still rising. The best sign of a short-term top will be a daily or weekly closing price reversal. Until these chart patterns take place, continue to trail stops for protection.
Technically, the March E-mini Russell 2000 is trading at a multi-year high. The key number today is an uptrending Gann angle at 909.10. A failure to hold this angle will likely mean the start of a near-term correction.
