E-mini Russell 2000 Index (TF) Futures Analysis – May 16, 2013

The June E-mini Russell 2000 Index is trading slightly lower this morning in limited trading. Many traders are on the sidelines ahead of today’s reports on inflation, housing, unemployment claims and manufacturing.

On Wednesday, the index continued its uptrend with a rally to 991.00. A trade through 981.00 will be the first sign that weakness and could be clue that momentum is shifting to the downside.

A key Gann angle comes in as support today at 974.20. A move through this level could trigger an even further decline since this angle has held as support since the index formed its bottom at 894.20 on April 18.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Fundamentally, traders will be focusing on this week’s unemployment claims. Estimates are for the number of claims to rise this week to 330,000 from 323,000 last week. This report could move the market since employment is being monitored closely by the Fed.

At 10am EDT, the Philadelphia Fed will release its manufacturing index. This report could set the tone for the day. Traders should look for increased volatility at that time.

Finally, five Fed members are on tap to give speeches today. Their comments could move the market if they mention the Fed stimulus program. Traders will be looking for clues as to when the Fed will release its exit strategy plan. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 15, 2013

The June E-mini Russell 2000 Index is trying to mount a comeback rally after early session weakness. Overnight, the market was under a little pressure after the Euro Region reported weaker-than-expected economic data. Later, a report showing a slow-down in New York manufacturing also put a lid on any upside activity.

Shortly after the opening, however, bargain-hunters re-emerged, driving up prices and helping to turn the market higher. If upside momentum continues, then look for the market to take out Tuesday’s high at 984.60.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Clearly the main trend is up. The higher-high, higher-low formation is a strong sign that fresh buying continues to drive this market. The slow and steady grind indicates the presence of professional buying. A sharp spike to the upside will indicate short-covering. As long as new money continues to come in, investors have no reason to believe this rally will be ending anytime soon.

The first sign of weakness will be a daily closing price reversal top. This will form if the market rallies to a new high then closes lower. Another sign of weakness will be a sustained move through an uptrending Gann angle at 970.50. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 14, 2013

The June E-mini Russell 2000 Index is expected to open better this morning, putting it in a position to challenge yesterday’s high at 975.20. Traders shouldn’t expect an acceleration through this level, but rather a slow grind as investors remain tentative about the long-side at current price levels. 

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

The first sign of weakness today will be a failure to hold 968.00.  A move through this level will be an indication that the selling is greater than the buying. Taking out the uptrending Gann angle today at 966.20 could trigger an acceleration to the downside since this angle has held as support since the bottom was formed at 894.20 on April 18. A sustained move through this angle could fuel the start of an eventual correction into the major retracement zone at 934.70 to 925.10. 

Fundamentally, despite the continuation of the rally on Monday, traders are still nervous that the Fed will release its plan to exit its aggressive stimulus plan. There is no timetable for this announcement so it may come as a surprise to traders, triggering an intraday sell-off. 

 

E-mini Russell 2000 Index (TF) Futures Analysis – May 13, 2013

After posting a new contract high at 973.70 on Friday, the June E-mini Russell 2000 Index is trading lower this morning. Traders appear to be tentative about taking the index higher even after this morning’s bullish U.S. Retail Sales report. Holding back investors today is a report in the Wall Street Journal about the Fed’s stimulus exit strategy. The Fed apparently is close to revealing how it is going to end its $85 billion per month bond-buying program. Investors are nervous because this would be a sign that the central bank is getting close to allowing interest rates to rise. 

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

A trade through 973.70 will mean that investors are taking the the news in stride. A sustained move through the uptrending Gann angle at 962.20 will be a sign that the selling is greater than the buying at current price levels. This could lead to the start of an eventual correction into a retracement zone at 934.00 to 924.60. 

 

E-mini Russell 2000 Index (TF) Futures Analysis – May 10, 2013

The June E-mini Russell 2000 Index reached a new high overnight but buyers backed away shortly before the cash market opening. Today looks like it is going to be a transition day as investors mull over buying at current price levels or exiting profitable positions.

The U.S. Treasury Bond and T-note markets are indicating that interest rates may rise in the near future. The Dollar is also rising as investors shed risky assets. This lack of interest in higher risk assets could put pressure on the Russell if investors decide to pare positions after a 16 day rally from 894.20 to 970.70.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Another sign of weakness will be a break through 958.20. This angle has provided both direction and strength for over two weeks. A move through this angle will be a strong indication that the selling is greater than the buying at current price levels.

The daily chart is also indicating that there is plenty of room to the downside. Based on the rally from 894.20 to 970.70, the retracement zone at 932.40 to 923.40 is another potential target. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 9, 2013

The June E-mini Russell 2000 Index is trading flat-to-lower. The lack of follow-through overnight suggests that investors have found an overvalued area. This may lead the index lower today as investors pause while reassessing the current situation. Strong corporate earnings and the accommodative Fed are the driving forces behind the current rally, but with earnings season over and the Fed still dealing with a sluggish economy, investors may decide to take a little breather at current price levels before regrouping for the next run. 

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Technically, the main trend is up on the daily chart. The nearest support is at 954.20. With the market currently trading near 967.00, the daily chart indicates the market is vulnerable to the downside. A break at this time will probably be welcomed by investors looking for value. There is supposedly plenty of money on the sidelines waiting to enter the market, but they are being patient, waiting for the right retracement. The rally this week has been labored, suggesting that investors have been tentative about buying strength. 

Picking a top is still a dangerous strategy so those waiting for a reason to exit their long positions or those counter-trend traders itching to sell should watch for a closing price reversal top. This chart pattern typically produces a 2 to 3 day break equal to at least 50% of the last rally. Based on the near-term range of 894.20 to 969.40, the next likely downside target is the retracement zone at 931.80 to 923.00. 

 

E-mini Russell 2000 Index (TF) Futures Analysis – May 8, 2013

The June E-mini Russell 2000 Index is called flat this morning. Last night the index failed to follow-through to the upside despite a strong finish on Tuesday. This may be a sign that investors are a little tentative about buying at current levels. Momentum is still pointing up, but this could shift quickly if buyers decide that the market has become too pricey. In this case, it is likely to begin the start of a near-term correction.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Ideally, I’d like to see the index rally to a new high then close lower. This closing price reversal pattern will leave no don’t that there are sellers in the market. A confirmation, however, will be needed to draw the attention of the short-traders. Once the shorts get involved, the break may accelerate as weak longs begin to exit. 

The first technical downside objective is an uptrending Gann angle at 950.20. If the reversal top is formed as expected then look for an even more meaningful correction. Based on the near-term range of 894.20 to 965.80, the retracement zone at 930.00 to 921.50 is the most likely objective for many bearish traders. In addition, since the main trend is up. A test of this zone is likely to draw the attention of new buyers looking for value. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 7, 2013

Look for the June E-mini Russell 2000 Index to open slightly higher this morning. Overnight, the Bank of Australia cut its benchmark interest rate. Investors are reading this as additional liquidity, giving the market the fuel to work higher.

With enough liquidity in place, the only thing investors have to worry about is value. If the perception is that stocks are overvalued, then a short-term top may form. Since the index is up 13 days from its recent bottom at 894.20, it is technically in the window of time for a top.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Trend traders are likely to continue to try to drive the market higher, but aggressive counter-trend traders may be waiting-in-the-weeds to take advantage of any signs of a top. While top-picking is not suggested, bearish investors should watch for a closing price reversal top to give them a strong reason to explore the short-side.

The nearest support is an uptrending Gann angle at 946.20. Since the main trend is up, a test of this angle is likely to attract fresh buying. If the downside momentum is strong enough and the angle fails, then look for the start of a meaningful correction.

Traders may be getting a little too complacent at current price levels. This may be the first indication that the index is setting up for a near-term correction. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 6, 2013

The June E-mini Russell 2000 Index is taking a breather overnight, following Friday’s surge. With the U.S. jobs report out of the way and in the absence of any major economic reports today, early indications are for the market to drift sideways throughout the session.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

If weak long traders decide to pare positions, look for a bias to develop to the downside. This move will not necessary indicate a change in trend, but is likely to mean that investors want to drive the market lower into a value zone for a fresh buying opportunity.

Technically, the first downside target is an uptrending Gann angle at 942.20. Watch for a technical bounce following the first test of this level. A sustained move through this angle is likely to indicate the start of a near-term correction.  

E-mini Russell 2000 Index (TF) Futures Analysis – May 3, 2013

The June E-mini Russell 2000 Index is posting a strong gain this morning. Upside momentum has put the index in a position to challenge the recent tops at 949.80 and 951.30. Although the move through 947.40 is a sign of higher prices to follow, a trade through 949.80 will turn the main trend to up on the daily chart.

The catalyst behind this morning’s rally is the better-than-expected jobs report. This morning the U.S. reported that the number of new hires jumped by 168,000. This number beat estimates ranging from 131,000 to 150,000. The market also received a boost from upward revisions in February and March. The number of jobs added in February was revised upwardly from 268,000 to 332,000. March was changed from 88,000 to 138,000.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

With the jobs data indicating the economy is still in the process of recovering, the Fed will have to decide whether to maintain its aggressive asset-buying program. Curtailing the program will lead to a drop in liquidity which could put pressure on equity prices.

Since the Russell 2000 is the weakest of the major indices, investors to should watch this index carefully since it is likely to indicate a top today before the other indices. Early signs of weakness in this index could set up the S&P and Dow for potential reversal tops at the close of today’s session.  

E-mini Russell 2000 Index (TF) Futures Analysis – May 2, 2013

The June E-mini Russell 2000 Index is trading better this morning after buyers stepped in following a test of a major 50% level. The inability to follow-through to the downside overnight also encouraged shorts to cover their positions, leading to this morning’s early strength.

From April 18 to April 30, the Russell rallied from 894.20 to 947.40. This range created a retracement zone at 920.80 to 914.50. On Wednesday, the futures contract broke to 920.40 before regaining the 50% level at 920.80 on the close. The ensuing technical bounce is helping to drive the market higher this morning.  

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

The short-term range is 947.40 to 920.40. This creates a short-term retracement zone at 933.90 to 937.10. Since the main trend is down, traders should look for selling pressure to re-emerge inside this retracement zone.

The two lower tops at 949.80 and 947.40 have given the Russell 2000 a bias to the downside. Because of this, investors are likely to continue to sell rallies until the buying pressure can overcome these tops.

Fundamentally, on Friday the U.S. reports its latest jobs data. Trading may be choppy and sideways today as investors take to the sidelines ahead of this major report. Investors should watch for a two-sided trade today and be careful not to get caught in the chop. 

E-mini Russell 2000 Index (TF) Futures Analysis – May 1, 2013

The June E-mini Russell 2000 Index is trading a little lower overnight. Following yesterday’s surge to 947.40, the index failed to follow-through to the upside. Some of the selling pressure is coming from the weaker-than-expected ADP jobs report. Later today, investors will get the opportunity to react to the latest ISM Manufacturing PMI. The big new today, however, will be the release of the U.S. Federal Reserve’s monetary policy statement later in the afternoon. Most investors expect the Fed to maintain the pace of its current asset buying program. This is helping to underpin the market.

Daily June Russell 2000 Index
Daily June Russell 2000 Index

Despite the bullish fundamentals, the June E-mini Russell 2000 Index is lagging behind the other major indices. This doesn’t mean that small cap stocks are weak, but rather there is more upside opportunity in the large cap equities. Since all the indices are on a tremendous run, many investors feel that small cap stocks are a little more risky at current levels if a meaningful correction should begin.

Technically, on Tuesday the market rallied to 947.40. The lack of follow-through overnight suggests that sellers may be defending the two previous tops at 949.80 and 951.30. There is plenty of room to the downside with 930.00 a potential downside target. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 29, 2013

Expectation of continued central bank liquidity is helping to boost the June E-mini Russell 2000 Index this morning. Traders are buying up the small cap index in anticipation of the Fed supporting its asset-buyback program at its two-day meeting on Tuesday and Wednesday. Following this monetary policy meeting, investors will shift their focus back to the economy on Friday when the U.S reports its latest employment data.

This morning, a report showing that consumer spending jumped in March surprised traders who had been looking for a small decline. This is a sign that consumers are shrugging off the recent tax hikes. Despite the surprise increase, the Fed is likely to maintain the pace of its current liquidity program.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Technically, the June E-mini Russell 2000 Index is expected to challenge downtrending Gann angle resistance at 937.80 this morning. A sustained move through this angle will put the index in a position to challenge last week’s high at 942.70. Taking out this level could trigger a further rally to 937.80.

There is plenty of room to the downside if the current rally fails. The first target is a low at 928.50. This is a minor level. A break through this price could trigger an acceleration to 922.20.

There is an upside bias to the market today because of increased demand for higher-risk. If uncertainty creeps into the market because of the upcoming Fed meeting then look for a choppy, two-sided trade. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 26, 2013

A weaker-than-expected quarterly GDP report is helping to pressure the June E-mini Russell 2000 Index. Traders were looking for the economy to show that it expanded by 3.1%. Instead, the report showed a growth rate of 2.5%.

This report is creating a little uncertainty in the market today because traders feel that the economy will continue to struggle because of planned government spending cuts and the new tax increases. Traders are also worried that although the growth rate missed the market, the fact that the economy grew may bring the Fed closer to ending its stimulus program.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Technically, the early weakness suggests that upside momentum is slowing and that sentiment may be shifting to the downside. In pre-market trading the index found resistance at 938.80. In addition, it also broke through a steep uptrending Gann angle that had given the market both strength and direction. This angle is at 942.20.

A sustained move through 942.20 could trigger a further decline to 918.20. In addition, based on the main range of 894.20 to 942.70, the retracement zone at 918.40 to 912.70 is also a potential downside target over the near-term.  

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

Greater demand for higher risk assets is helping to drive up the June E-mini Russell 2000 Index today. This “risk on” scenario is likely to continue as long as the U.S. Dollar remains weak. Since there are no major economic reports today, the emphasis should be on demand for risk.

Now that the index has crossed over to the bullish side of a major retracement zone it should begin to pick up momentum. This zone is now support at 928.60 to 922.00.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

This morning the index is attempting to cross over to the bullish side of an uptrending Gann angle at 934.20. A move through this price should increase momentum and could trigger an acceleration to the upside to a downtrending Gann angle at 939.80. Sustaining a move through this angle could trigger an even further rally to 944.80.

Conditions should remain bullish throughout the session as long as the dollar remains under pressure. A break back under 958.60 will be the first sign of weakness. Traders should also start watching for an intraday reversal top since we are up five days from the bottom. This will be the first sign that sellers and profit-takers are coming into the market. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 24, 2013

The June E-mini Russell 2000 Index rallied early in the session, but is only posting a marginal gain shortly before the opening. Weak economic data from Germany and Australia is fueling speculation of fresh central bank stimulus in the form of new interest rate cuts. This is likely to be the catalyst for a rally today if investors continue to maintain their demand for higher risk assets.

 Technically, the June E-mini Russell 2000 Index is in a downtrend on the daily chart. Currently, it is straddling a Fibonacci level at 928.60. This price may act as a pivot if traders cannot sustain the move above it. If the market weakens, it could break back to the 50% level at 922.00.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Gann analysis has revealed that the market has been moving up at a pace of 8 points per day since bottoming at 894.20 on April 18. This places support at 926.20 today. Sustaining a move above this angle will put the market in a position to rally throughout the session.

On the upside, the first target is a downtrending Gann angle at 931.80. A move through this angle could trigger an acceleration to the upside with 940.80 a potential target over the near-term.

There is a bias to the upside today with early demand for higher risk assets suggesting that today could be a “risk on” day. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 23, 2013

The June E-mini Russell 2000 Index survived an attempt to break through the recent bottom at 894.20 on Monday. The strong recovery and higher close was a sign that investors are still supporting this market on dips despite the pressure of a weakening global economy. This type of action suggests that investors remain confident in the long side as long as the central bank liquidity is available.

Overnight, traders weren’t fazed by the report of weaker-than-expected manufacturing data from China. The negative news from Europe appears to be a non-factor also as investors believe the European Central Bank will provide additional stimulus in the form of a rate cut. Today’s U.S. Manufacturing PMI and New Home Sales reports should’ve have that much of an effect on the trading action either.

Helping to boost the market today was last night’s report that Netflix (NFLX) signed up more new subscribers than expected. The stock was up 24% in pre-market trading, giving indices a boost across the board.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Technically, the main trend is down on the daily chart, but the market has formed a range. The new range is 949.80 to 894.20. This range has formed a retracement zone and first major upside target at 922.00 to 928.60.

Standing in the way of a spike to the upside is a downtrending Gann angle at 917.80. There may be a technical bounce following the first test of this level, but a sustained move above it could trigger an acceleration to the upside.

On the downside, key support comes in at 906.20 and 900.20.

Based on pre-market trading and the market’s ability to absorb potentially negative news, early indications are that today is going to be a “risk on” day. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 22, 2013

After finding support on a major uptrending Gann angle late last week, the June E-mini Russell 2000 is posting a strong recovery rally this morning. The overnight action has helped form a new main bottom at 894.20. This has helped to complete a range from the 949.80 top. The new range has formed a retracement zone at 922.00 to 928.60. This zone is the next likely upside target. Since the main trend is down, investors should look for sellers on the first test.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

A downtrending Gann angle from the 949.80 top is also a potential resistance level. This angle is at 921.80. Technically, a resistance cluster has formed at 921.80 to 922.00. On the downside, a Gann angle at 902.20 is new support.

Fundamentally, today is shaping up to be a “risk on” day as traders react positively to comments from the G20 leaders. Traders should watch the action in the USD/JPY to gauge the strength and direction of the market today. If the Dollar/Yen break through 100 with conviction, the June E-mini Russell 2000 could spike higher. 

E-mini Russell 2000 Index (TF) Futures Analysis – April 19, 2013

The recent sell-off in the Daily June E-mini Russell 2000 Index has the market rapidly approaching a major retracement zone. From December 28 to March 25, the index rallied from 820.70 to 951.30. This rally created a retracement zone at 886.00 to 870.60. Based on the current downside momentum, it looks as in this zone is the next likely downside target.

On Thursday, the index found support for the second consecutive day on a long-term uptrending Gann angle at 897.70 today. The market actually traded 894.20 before recovering into the close. This morning the market is testing a steep downtrending Gann angle at 901.80. A move through this price will put the market in a position to rally further.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

The short-term range is 949.80 to 894.20. This range has created a retracement zone and potential upside target at 922.00 to 928.60. A downtrending Gann angle at 925.80 pierces this zone, creating a potential resistance cluster.

With the main trend down on the daily chart, investors should watch for a selling opportunity after the next short-covering rally.

Fundamentally, investors are concerned about the slowing U.S. economy and lackluster earnings. Worries are also being expressed about the possibility of weak growth in China. Europe continues to be a problem that could encourage investors to seek shelter in the U.S. Dollar.

Although there is an upward bias today, the bigger picture suggests that we could be looking at the start of a sizable correction.   

E-mini Russell 2000 Index (TF) Futures Analysis – April 18, 2013

The June E-mini Russell 2000 Index is trading higher this morning. Short-covering and profit-taking after Wednesday’s sell-off fueled the overnight rally. Short before the opening the market received another boost after U.S. weekly jobless claims fell in line with expectations.

Daily June E-mini Russell 2000 Index
Daily June E-mini Russell 2000 Index

Because of the release of major earnings reports from Google (GOOG), Microsoft (MSFT) and International Business Machines (IBM) after the trading session, trading could be choppy and two-sided today. At time volume could be low also creating the possibility of volatile spikes.

There is a lot of nervousness in the market at this time because of weaker-than-expected earnings reports from earlier in the week as well as concerns about a weakening U.S. economy. Shortly after the opening today, the Philadelphia Fed is going to release its latest report on manufacturing. This report can be a market mover so investors should be prepared for volatility about 10 am Eastern.