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

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

The March E-mini Russell 2000 Index is trading flat this morning after yesterday’s U.S. market holiday. Last week, the index reached a new high for the year at 925.30. This move kept the uptrend intact but the lack of follow-through to the upside suggests that momentum is slowing.

Fundamentally, with earnings season coming to an end, investors are looking for a catalyst to take the market to the next level. Today it could be housing. This morning the National Association of Home Builders/Wells Fargo housing market index for February is expected to show a slight gain. This could give the market a boost.

Any rally triggered by a good housing number is likely to be short-lived because it appears that investors are starting to become concerned that the stock market is overextended and ripe for a correction. The catalyst behind a correction could be lower demand for higher risk assets or worries about the Federal government’s across the board spending cuts on March 1.

Technically, the main trend is up. A trade through 925.30 will resume the uptrend while a break through 891.10 will turn the main trend to down on the daily chart.

The key Gann angle to watch is at 917.10. This angle has given the market direction since January 31. A break through this angle will put the market in a weak position and will likely trigger a short-term correction. Based on the range of 891.10 to 925.30, the retracement zone at 908.20 to 904.10 is likely to be the first downside target.

 

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

The March E-mini Russell 2000 Index is trading sideways-to-lower overnight in limited action. On Friday, the index rallied to a new high for the year about mid-session then coasted lower into the close. This was hardly a vote of confidence going into an extended holiday weekend.

Although the index continued its uptrend last week, the momentum has slowed and volume has been slowly trending lower. Unless the index makes a new high today and closes lower, a closing price reversal top will not take place. I bring this up because this is the type of top that usually accompanies this kind of rally. This doesn’t mean that aggressive short sellers won’t take advantage of today’s shortened session and pressure the index into the close.

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

Doubt and concern are slowly beginning to creep into the market daily. One of the doubts is the market’s ability to continue to post new highs after the quarterly earnings season draws to a close. The approaching March 1 deadline for across-the-board Federal budget cuts is the concern. If investors decide to pare positions over the next two weeks, this is likely to be the main reason.

Technically, the main trend is up. The main trend will not turn down unless the swing bottom at 891.10 is violated. At this time the index is set up for a correction. The first sign of weakness will be a break under an uptrending Gann angle at 891.10. This could trigger a near-term break into a retracement zone at 908.20 to 904.10.  

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

The March E-mini Russell 2000 index rallied to a new high for the year on Thursday. The surge in prices has put the index in a position to post a solid weekly gain. With a clearly defined uptrend taking place, the only concern for long-traders should be the technical closing price reversal top chart pattern. This will only occur on the daily chart if the market makes a new high and closes lower, or on the weekly chart on close under 912.60.

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

Another sign of weakness will be the failure of an uptrending Gann angle at 913.10. A move through this level will not change the trend to down, but will indicate that the selling is greater than the buying at current price levels. A break through this level is likely to trigger a break into a retracement zone at 907.50 to 903.50.

Outside influences could control the market today. A sell-off in risky currencies coupled with a rapid rise in the U.S. Dollar could pressure the equity markets. A strong rally in the Japanese Yen could also encourage investors to take a little bit off of the top. 

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

A sharp sell-off in the Euro overnight is driving investors out of higher-yielding assets. This is putting pressure on the large-cap stock indices and the small-cap March E-mini Russell 2000 index.

 For weeks the index has been trending higher, but the rate of the ascent has left investors concerned. Volume has been low and volatility has been dropping, creating a feeling of complacency. This action is typically a precursor to renewed volatility. The overnight action seems to have caught analysts by surprise so investors may overreact to the downside today.

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

Technically, the key price level to watch is 911.10. This price was created by a slow-moving angle from the 891.10 bottom on January 31. A break through this level is likely to mean a test of a retracement zone at 905.80 and 902.35.

The main trend is up and will remain up until the swing bottom at 891.10 is violated. If this occurs then traders should look for a possible acceleration to the downside. 

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

The March E-mini Russell 2000 Index rallied on Tuesday ahead of President Obama’s State of Union address. Traders were apparently optimistic that he was going to say something bullish or that he was not going to say anything to bring the rally to a screeching halt.

Although today’s retail sales report is expected to show a slight decline from last month, traders are likely to focus on Obama’s call for a $50 billion infrastructure spending plan. Prices are inching higher overnight, but there is still some concern that profit-takers are waiting for the first crack in the trend to take advantage of the lofty price levels.

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

While it is not being suggested to jump in front of the trend, traders should be aware of the fact that volume has been low and volatility has been falling. These actions aren’t bringing conviction to the table, but nonetheless, the trend is still rising. The best sign of a short-term top will be a daily or weekly closing price reversal. Until these chart patterns take place, continue to trail stops for protection.

Technically, the March E-mini Russell 2000 is trading at a multi-year high. The key number today is an uptrending Gann angle at 909.10. A failure to hold this angle will likely mean the start of a near-term correction. 

E-mini Russell 2000 Index (TF) Futures Analysis – February 12, 2013

The March E-mini Russell 2000 Index is trading a little lower shortly ahead of the opening. On Monday, the market inched up to a new year for the year at 913.70 without much fanfare. This could be a sign that the rally is running out of steam.

Tonight President Obama will deliver the State of the Union address. He will definitely talk about the economy. This may keep investors on the sidelines today or encourage some to pare their positions.

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

Technically, the main trend is up. The main trend turns to down on a break through the last swing bottom at 891.10. An uptrending Gann angle at 907.10 is providing support, having been tested successfully several times over the past two weeks.

A failure to hold the uptrending Gann angle will be a sign of weakness. This should put pressure on the market. Based on the short-term range of 891.10 to 913.70, a key pivot price has formed at 902.40. A test of this price could draw the attention of buyers, but a move under it will probably be a strong sign that prices are headed lower. 

E-mini Russell 2000 Index (TF) Futures Analysis – February 11, 2013

The March E-mini Russell 2000 extended its gains overnight after closing on its high on Friday. Positive economic news from the U.S. and China were the apparent catalysts last week. Low volume on a new high is typically an indicator of impending volatility so traders should watch for abrupt reversals in direction. The lack of fresh economic news could also contribute to a two-sided session.

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

Technically, the main trend is up. The main trend turns down on the daily chart following a break through the January 31 bottom at 891.10. With the index extending its gains overnight, traders should watch for a potential closing price reversal top to signal the start of a near-term break.

Besides the higher-high, lower-close formation, a breakdown through an uptrending Gann angle at 907.10 will be a sign of weakness. 

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

Since reaching a new high at 912.00 on February 1, the March E-mini Russell 2000 index has flat-lined as traders seek more guidance from earnings and the economy. The key factor affecting the market lately has been the lack of demand for higher risk assets. Equity prices have basically stabilized since the release of last week’s U.S. Non-Farm Payrolls report and the top in the EUR/USD on February 1.

Today investors will be seeking clarity from the U.S. Commerce Department December trade figures. Economists are looking for a drop of more than 6% to $45.5 billion. Weaker imports are the main reason for the narrower trade deficit. Shortly after the cash market opening, the latest data on wholesale inventories will also be released. The market is likely to react to both reports, but the news is unlikely to control the direction of today’s trading.

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

The near-term range of 891.10 to 912.00 continues to mean that the most important number to watch is the pivot price at 901.60. This pivot price along with an uptrending Gann angle at 903.10 is controlling the direction of the market.

A break through the angle will be the first sign of weakness, followed by the pivot. A sustained move under the pivot combined with increasing volume will be a sign that sentiment is shifting to the downside. The tight and narrow ranges suggest impending volatility. This means traders should brace for either a strong rally through the top at 912.00 or the swing bottom at 891.10. A move through the high reaffirms the uptrend while a break through 891.10 will turn the main trend to down. 

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

Shortly before the opening, the March E-mini Russell 2000 index sits in a strong position to breakout above last week’s high at 912.00. This move will resume the uptrend and could launch a huge rally following four days of consolidation.

There is a strong bid in the market this morning ahead of the European Central Bank’s monetary policy decision and weekly U.S. labor market data. Bullish traders are hoping ECB President Mario Draghi says something positive in his post-meeting news conference to drive up demand for higher risk assets. Long investors are also looking for a drop in weekly jobless claims to serve as proof of an improving economy.

Technically, on the upside, investors would like to see a breakout over 912.00 on strong volume. This would be a sign that the move is being driven by clarity and conviction. A breakout driven by weak volume will mean there is lingering uncertainty.

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

Given the short-term range of 891.10 to 912.00, the pivot price at 901.60 has proved to be an important sentiment indicator. After straddling this line for three days, consecutive closes above it appear to be indicating a strong bias to the upside.

Additionally, the March E-mini Russell 2000 is following an uptrending Gann angle at 901.10. This angle in conjunction with the pivot price has formed a support cluster at 901.60 to 901.10. A failure to hold this zone will be a strong sign that sentiment is turning lower. 

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

Strong earnings reports on Tuesday helped drive the major stock indices higher, but the lack of follow-through to the upside overnight suggests that short-covering rather than new buying may have been responsible for the bulk of the rally. This may have been the case for the March E-mini Russell 2000 index futures contract.  

The two large-cap indices, the March E-mini S&P 500 and the March Dow Jones Industrial Average futures contracts challenged last week’s high with the S&P exceeding it by two ticks. The Russell 2000 closed higher but the range was inside of the previous day’s range. This was hardly a vote of confidence for higher prices.

The divergence between the large-cap and small-cap stocks could be suggesting that a correction led by profit-taking could be in the making. The price compression taking place in the Russell 2000 suggests that a volatile move is imminent. Since the upside potential is relatively unknown, investors may shift their focus to the downside and potential value zones before taking the market higher again.

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

Technically, the short-term range is 891.10 to 912.00. The pivot price of this range at 901.50 is controlling the short-term direction of the market. Shortly before the opening, the Russell 2000 is testing this level. With an overnight bias developing to the short-side, don’t be surprised if the first move is down shortly after the opening.

The main trend is up on the daily chart. A trade through 912.00 resumes the uptrend while a break through 891.10 changes the main trend to down. The first down side targets are a pair of uptrending Gann angles at 873.10 and 872.10. Although there may be a technical bounce following the first test of these angles, the damage will be done to the uptrend so a further decline may be inevitable.

A change in trend to down will indicate that prices are too high and that investors will be looking for value before re-entering. Based on the range of 823.10 to 912.00, the best value zone will be the retracement area bounded by 867.60 to 857.00. A test of this zone is likely to attract fresh money. 

E-mini Russell 2000 Index (TF) Futures Analysis – February 5, 2013

The March E-mini Russell 2000 Index is called flat-to-higher. Looking at the short-term range of 891.10 to 912.00, the key pivot level to watch is 901.60. This price is controlling the short-term direction of the market.

The main trend is up. A trade through 912.00 is likely to renew interest in the upside while taking out 891.10 will turn the main trend to down. Oversold conditions could put pressure on the index, but this isn’t expected to trigger a long-term correction.

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

An uptrending Gann angle at 871.10 is the first downside target. This is followed by a retracement zone at 867.60 to 857.10. This zone represents value and a test of it will likely attract fresh buyers.

Fundamentally, the March E-mini Russell 2000 should take its cues from the major large-cap indices. While generally not a leader to the upside, a breakdown through support is likely to be a clue that investor sentiment is shifting. 

E-mini Russell 2000 Index (TF) Futures Analysis – February 4, 2013

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.

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

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. 

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

Following a minor reversal to the upside on Thursday, the March E-mini Russell 2000 index followed through to the upside in overnight trading, putting it in a position to challenge the high of the week at 907.40. A trade through this level will make 891.10 a new swing bottom. Once this is formed, a trade back through it will turn the main trend to down on the daily chart.

The Russell 2000 also crossed over to the bullish side of a downtrending Gann angle from the 907.40 top at 895.40 today. This is a sign of renewed strength although the index will have to take out 907.40 to confirm the move.

The key angle which has to be overcome is the long-term uptrending Gann angle at 911.10. Regaining this angle will put the market in an extremely strong position.

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

On the downside, a better than expected Non-Farm Payrolls number will move the Fed closer to ending its quantitative easing program. This will create some uncertainty for traders who would then have to factor in the possibility of higher interest rates sooner than expected. The next potential downside target is an uptrending Gann angle at 867.10. This is followed by a retracement zone at 865.30 to 855.30.

In breaking news, U.S. reported that 157,000 jobs were added in January. This is below the consensus guess of 165,000. The unemployment rate also inched higher to 7.9%. Both of these numbers means the Fed is unlikely to alter its monetary policy or provide any reason for investors to believe that the economic recovery is gaining steam.

The trading action is mixed since investors aren’t sure whether to take the market higher because interest rates will remain low or sell the index because the economy is still weak. 

E-mini Russell 2000 Index (TF) Futures Analysis – January 31, 2013

Pressure from the large cap indices is fueling overnight weakness in the March E-mini Russell 2000 Index. This action started on Wednesday when the Russell failed to make a new move high, breaking the correlation with the S&P 500 and NASDAQ-100. This divergence sets up potentially bearish trading conditions.

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

Technically, the March E-mini Russell 2000 Index broke through a long-term uptrending Gann angle at 907.10 today. This is the first sign of weakness since late December. One of the next downside targets is a pair of uptrending Gann angles at 865.10 and 864.10.

Based on the short-term range of 823.10 to 907.40, the retracement zone at 865.25 to 855.30 is also a key target. On the upside, 899.40 is resistance today. If the market is indeed turning lower then this price should stop the rally. A trade through 907.40 will negate this potentially bearish chart pattern. 

E-mini Russell 2000 Index (TF) Futures Analysis – January 30, 2013

Despite the current uptrend, the March E-mini Russell 2000 index appears to be tiring. This morning it is testing an uptrending Gann angle from the 823.10 bottom. This angle is at 903.10. A trade through this angle should trigger the start of a near-term break.

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

The daily chart indicates that there is plenty of room to the downside. Based on the short-term range of 823.10 to 907.40, the retracement zone at 865.30 to 855.30 is the next likely downside target.

Trading volume could be light today because of the Fed meeting. Activity could pick up in the afternoon. 

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

Traders are looking for the March E-mini Russell 2000 Index to open lower on Tuesday. Lower demand for higher risk assets is helping to keep a lid on the upside price movement. Today, investors will be given the opportunity to react to U.S. housing and consumer confidence data. Housing is expected to improve while consumer confidence may show a sharp drop. Ford (F) and Amazon (AMZN) are the stocks to watch today.

The reaction to the reports may be short-lived, however, since the Fed begins a two-day policy meeting and on Friday, the U.S. announces its latest jobs data. The Fed is expected to keep its loose monetary policy in the hopes of stimulating the economy.

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

Technically, the main Gann angle to watch is 899.10. This long-term angle has controlled the direction of the market since late December. A break through this angle will be a strong sign that sentiment is turning weaker.

The daily chart indicates that there is plenty to room to the downside if traders can sustain the move under the uptrending Gann angle. Based on the short-term range of 823.10 to 907.20, the next major downside target is a retracement zone at 865.20 to 855.20. 

E-mini Russell 2000 Index (TF) Futures Analysis – January 28, 2013

The March E-mini Russel 2000 index reached a new high overnight, leading to the call for a steady-to-higher opening. Like the other indices, the Russel l is in an uptrend. Although the index has been trending higher, the rally hasn’t been “lights out”. The steady climb is beginning to raise questions about the buying power behind the move.

Technically, the only indicator to watch is the uptrending Gann angle at 895.10. The market has held above this angle for 18 trading days. A break through this angle is likely to be the first sign of an impending correction.

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

Traders should pay close attention to the action around this angle since the daily chart indicates there is plenty of room to the downside. Based on the current short-term range of 823.10 to 904.90, there is the possibility of a near-term break to 864.00 – 854.40.

Watch for a higher-high, lower-close to give investors an excuse to take profits. This should trigger the break. Until there is a definitive size though, trade the trend and don’t try to pick a top. 

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. 

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

Following a sharp sell-off in Apple (AAPL) overnight, the March E-mini Russell 2000 Index futures contract is trading lower ahead of the opening.

The disappointing results from Apple as well as the threat of a nuclear weapons test by North Korea are two concerns for small-cap stock traders today. Stronger-than-expected economic data from China is helping to underpin the market, but today’s trading direction is likely to be determined by the movement in Apple.

If there is a follow-through to the downside during the day session then look for the Russell to feel pressure. If all the selling in Apple took place overnight and investors feel it has reached a value zone then a rally in the stock could single-handedly raise the major indices.

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

Volume and volatility remain relatively light suggesting that retail traders still haven’t returned to equities en masse despite the strong rally since the first of the year. One chart feature that could my eye was the divergence taking place between the Russell 2000 and the large-cap S&P and Dow. While the larger cap index and average were trading at new highs, the Russell failed to make a new high. This may be an early indication that the buying is drying up.

Technically, the March E-mini Russell 2000 is approaching an uptrending Gann angle. This angle has held since the index bottomed at 823.10 on December 31. It comes in at 887.10 today. Since the main trend is up, investors may buy the first test of this angle. If this angle fails to attract buyers then the index is likely to weaken. If momentum increases on the breakdown of this angle then it may start a normal correction.

Based on the range of 823.10 to 899.40, the first target zone is the 50 to 61.8 percent retracement zone at 861.30 to 852.30. Additionally, an uptrending Gann angle that pierces this zone at 855.10 could become an attractive support level for buyers.

The key today will be whether or not the markets shrug off the bad news from Apple. If there is a follow-through to the downside and the Russell breaks the support angle then look for investors to use this as an excuse to bailout. Keep in mind that I am looking for a correction and not necessarily a change in trend to down. This correction is designed to relieve the upside pressure and allow traders to buy equities at more favorable prices. 

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

The March E-mini Russell 2000 stopped short of the psychological 900.00 level on Tuesday after posting a late session surge. Trading was extremely light in the overnight market and the trading range was tight as the lack of solid economic news overnight kept investors on the sidelines. Furthermore, traders may be sitting on their hands ahead of the Apple (AAPL) earnings report which will be released later today.

The E-mini Russell 2000 index is made up of small caps stocks which are speculative by nature. Therefore, the index tends to be more sensitive to bullish and bearish news. This tends to cause periodic spikes in the market. In addition, volatility could be high at times under certain trading conditions. Although the index has been rising along with the larger-cap indices, any hesitation in those indices or shifts in sentiment may be exaggerated in the Russell.

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

Volume is down and there have been signs of increased put option activity which could mean the index is setting up for a reversal to the downside coupled with increased volatility. If you missed the rally, continue to monitor the index for a counter-trend reversal. This could pay-off if investors decide that the index is overbought.

Technically, since the index is at multi-year highs, there is no true resistance. 900.00 may be a psychological resistance level but this has to be proven. The best proof of a top in a trending market is a closing price reversal top. It may show up on the intraday charts first or it may be revealed on the daily chart. Since it is usually a reliable signal, it is worth waiting for. It is also better than continuously feeding this index by trying to pick a top. In other words, wait for a signal then pounce on it.

Looking at the chart, the uptrending Gann angle from the 823.10 bottom is the timing line. This angle is at 883.10 today. Since the main trend is up, there may be a technical bounce on the first test, but if this angle fails then look out to the downside.

Just look at the chart and you can see a lot of space between the two angles. One is at 823.10 and the other is at 853.10. Throw in the retracement zone at 861.25 to 852.25 and you can see that by waiting for the appropriate sell signal, a trader has the potential for a big pay-off.