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. 

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

The March E-mini Russell 2000 futures contract rallied to 895.00 overnight before meeting resistance. Selling pressure took the market lower, putting the index in a position to post a closing price reversal by the end of the session today.

Earnings concerns as well as a stronger Japanese Yen are weighing on equity prices this morning. This trend is likely to continue shortly after the opening.

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

Technically, the first downside target is 883.10. A failure to hold this angle could trigger a sharp break. Based on the main range of 823.10 to 895.00, the next downside target is the retracement zone at 859.10 to 850.60. Another uptrending Gann angle is at 853.10, making 853.10 to 850.60 a key support cluster.

The Russell 2000 follows small-cap stocks. Today the pressure is on the large cap stocks so the index may follow the bigger indices lower but not necessarily with the same magnitude. 

E-mini Russell 2000 Index (TF) Futures Analysis – January 21, 2013

The March E-mini Russell 2000 futures contract reached a multi-year high overnight with very little follow-through. Today’s action is expected to be limited because of the holiday in the U.S. Cash markets are closed and electronic trading closes early so don’t expect much movement.

Looking ahead to the rest of the week, although conditions may be overbought due to the huge rally since the first of the year, as long as stocks are paying the best return, look for an underlying bid.

E-mini Russell 2000 Index
E-mini Russell 2000 Index

Concerns that politicians will turn the debt ceiling issue into a long debate could be limiting gains, but there are rumors circulating that the Republicans are going to offer the President a three-month deal to allow for more discussion.

Technically, major support is at 879.10. A failure to hold this angle could trigger a correction to 857.90. 

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

The March E-mini Russell 2000 futures contract surged to a new high on Thursday without much fanfare. This may be a sign of a tired market. Overnight there was no follow-through to the upside which leads one to believe that the rally may have been option-expiration related.

Near-term support is at 875.10. A break through this level will put a bearish spin on the index. From a weekly standpoint, a close under 878.10 will send out a bearish signal.

E-mini Russell 2000
E-mini Russell 2000

The inability to follow-through to the upside and the general sluggishness of the overnight trading action suggests an overbought market. Although this appears to be evident, the absence of a clear bearish signal is helping to maintain the upside bias.

Although the U.S. debt ceiling issue is a major concern, investors aren’t expressing the feeling of doom and gloom that they showed last month when the U.S. was debating the fiscal cliff. This feeling of complacency could turn around and bite traders next week, it there are signs that the debt issue is at an impasse. Until then enjoy the uptrend as long as the market continues to make higher tops and higher bottoms. 

E-mini Russell 2000 Index (TF) Futures Analysis – January 17, 2013

Increased demand for higher risk assets is helping  boost small-cap stocks. Although the range has been narrow, the March E-mini Russell 2000 futures contract is called slightly better based on the overnight trade.

Daily E-mini Russell 2000
Daily E-mini Russell 2000

Shortly before the cash market opening, the Russell 2000 is poised to challenge the multi-year high made earlier in the week at 883.50. A move through this level is likely to trigger a sharp rally if there is volume behind it. Since the move will be based on momentum, there is no target at this time.

On the downside, uptrending Gann angle support is at 871.10. A break through this level will conviction should trigger the start of a meaningful correction. The next likely downside target is a retracement zone at 853.30 to 847.20. 

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

The March E-mini Russell 2000 soared late in the session on Tuesday to post a new multi-year high at 883.50. Short-covering was most likely the reason for the rally as bullish traders took advantage of thin trading conditions. Volume is down so investors aren’t putting much emphasis on the move.

E-mini Russell 2000
E-mini Russell 2000

Technically, uptrending Gann angle support is at 867.10. This is the first potential upside target. Since the main trend is up, buyers are likely to show up on the first test of this level. The chart indicates that a break though this angle could trigger a sharp move.

Based on the 823.10 to 883.50 range, a key retracement zone has been established at 853.30 to 846.20. This is the ultimate downside target should sellers gain control of the market. 

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

The March E-mini Russell 2000 futures contract is poised for a sell-off after reaching a top last last week at 882.50 and consolidating for a few days. The lack of follow-through to the upside suggests overbought conditions are likely to trigger a near-term break but not necessarily a change in trend.

Concerns over the upcoming debt ceiling debate and a strong rally in the Yen are two reasons for the overnight weakness.

Technically, the Russel l is in a position to test an uptreneding Gann angle at 863.10 today. Since this angle is coming from an important bottom at 823.10, it could draw the attention of buyers on its initial test.

E-mini Russell 2000
E-mini Russell 2000

A failure to hold this angle could trigger an acceleration since the daily chart indicates there is plenty of room to the downside. Based on the near-term range of 823.10 to 882.50, the first target zone is a 50 to 61.8 percent area at 852.80 to 845.80.

A pair of slower moving Gann angles at 843.10 and 842.10 should provide additional support. Both of these angles could become important on Wednesday since they will cross the Fibonacci price at 845.80.

Looking at the long-term structure of the daily chart pattern, the angle from the November 15 bottom at 760.10 is most important. Although the swing chart indicates the main trend will not turn down until 823.10 is violated, a sustained move through the long-term Gann line will in effect mean that sentiment has shifted to the downside. 

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

Two days of sideways trading action suggests the March E-mini Russell 2000 is poised for a near-term sell-off. Overbought conditions and profit-taking ahead of the debt ceiling debate may be contributing to the overnight weakness.

The chart indicates there is room to the downside. Traders should look for an early test of an uptrending Gann angle at 859.10. Since the main trend is up, expect a technical bounce on the first test.

Daily March Russell 2000
Daily March Russell 2000

Based on the short-term range of 823.10 to 882.50, expectations are for an eventual break into a retracement zone at 852.80 to 845.80. The main trend is not expected to turn down. The breaks should be corrective in nature and set up the next buying opportunities.