The small-cap March E-mini Russell 2000 index is expected to trade lower today based on a drop in demand for higher-yielding assets. Although Friday’s rally took out the previous top at 907.40, reaffirming the uptrend and reaching a level at 912.00, the lack of follow-through overnight and the subsequent sell-off suggests that sentiment is shifting to the downside.
The inability to crossover to the bullish side of an uptrending Gann angle at 915.10 is another sign of weakness. This angle had provided direction for the Russell 2000 for 19 trading sessions. Now that this angle has become resistance, longs are likely to begin bailing out with shorts standing ready to take control.
The main trend is up, but unlike the large-cap indices, it is being threatened. A trade through 891.10 will turn the main trend down for the first time since late November. This move should draw more short-selling which means a test of the retracement zone at 867.60 to 857.00 is imminent. Additional Gann angle support is at 869.10. A test of this level could trigger a technical bounce, but if downside momentum prevails, the market should eventually reach the retracement zone.