The strong pre-opening action in the March E-mini Russell 2000 has the index in a position to test the all-time high at 933.20. The index is rallying this morning on the heels of bullish jobs data from the private firm ADP. The data showed an increase of 198,000 jobs in February. This is the biggest jump in a year and could be an indication of a strong U.S. employment report on Friday.
The fact that the Russell is lagging the other indices doesn’t necessarily mean it is weaker, it probably means that investors are shifting their funds into larger cap stocks. This allocation play typically takes place after January or February.
Later today, investors will get a chance to react to the latest Fed Beige book statistics. This could be a market mover if it shows that some regions are still struggling to gain traction. Traders may begin to pare positions late in the session ahead of Thursday’s key central bank decisions. Although most investors feel that the European Central Bank, the Bank of England and the Bank of Japan are likely to maintain their easy money policies, investors may use these meetings as an excuse to take profits.
Technically, investors should be watching for a closing price reversal top especially as it nears the all-time high at 933.20.