The March E-mini Russell 2000 Index posted a new high this morning after the U.S. government reported that the economy added 236,000 new jobs in February. This figure was well above the pre-report consensus of 160,000. Additionally, the unemployment rate fell to 7.7%.
With the main trend clearly up and nothing to stand its way, expectations are for the trend to continue throughout the session. Although the main trend is up, long traders should have an exit strategy in place just in case of a reversal to the downside. Because of the surge in prices this week, the index may be too “hot”, leading to the possibility of a profit-taking led sell-off.
Since the index is in the “window” of time for a closing price reversal top, investors should watch the hourly chart for the first sign of selling pressure. A typical higher-high, lower-close could be the first sign that the selling is greater than the buying at current price levels.
Although this chart pattern will not mean that the trend is turning down, it could lead to the start of a sizable 2 to 3 week correction. Key support at 924.60 is a potential downside target.