Daily March E-mini Russell 2000 Index

E-mini Russell 2000 Index (TF) Futures Analysis – January 25, 2013

The March E-mini Russell 2000 Index inched a little higher overnight. The index reached a new high at 903.20, a tick better than yesterday’s high at 903.10. It’s often said that “a trend is motion is likely to remain in motion until acted upon by an outside force”. This means that we are likely to see another rally until the buying dries up or long investors decide that prices are too far above value.

Besides a handful of earnings reports, the Commerce Department releases new home sales data for December. Economists forecast a total of 385,000 annualized units, compared with 377,000 in November. It is not likely that a miss will help put in a top in the Russell, but it may give investors an excuse to pair positions.

Daily March E-mini Russell 2000 Index
Daily March E-mini Russell 2000 Index

The breakout rally in the Euro may translate into a “risk on” day which means we may see a rapid move to the upside. Since the market has been moving steadily higher, a spike move at this time could mean we’ve reached an overbought level, making the market ripe for a correction. Since the uptrend is strong, it doesn’t make sense to try to pick a top; however, an intraday closing price reversal top may be the best reason for aggressive speculative traders to explore the short side with limited risk.

Technically, the March E-mini Russell 2000 is getting close to testing a long-term uptrending Gann angle at 891.10. Since the main trend is up, buyers are likely to support a test of this angle. However, a break down through this angle could trigger the start of a sizable break if investors decide to liquidate with conviction. This could trigger the start of a break to at least 863.10 to 853.70 over the near-term. 

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.

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