Futures contracts have rallied higher on lower volume as traders remain cautious after the three broad indices moved within a tight range since December's highs.

Many futures investors trade the E-mini S&P 500 (ES) , which has "failed to break higher as the E-mini Nasdaq (NQ) breaks higher, and the E-mini Russell 2000 (TF) has failed to deliver anything but lower highs since December until Feb. 9," said Anne-Marie Baiynd, a Detroit-based trader and author. "This new break to higher levels in the E-mini S&P 500 and the rise of the E-mini Russell 2000 into old highs are the levels to watch now."

Even as investors have emerged at broad support levels seen on the weekly charts with these major indices moving in different directions, it could be signaling more specific indicators particularly a shift in the magnitude of returns that could be index dependent.

The E-mini Russell 2000 gives investors exposure to higher risk, but making an assumption that traders are moving slowly to less risk by taking a profit and moving out of the index may be premature, she said.

One possible scenario is that as traders move out of the E-mini Russell and S&P 500, they could be allocating their funds into the E-mini Nasdaq.

"The divergent differences between the indices are telling us something, but it seems uncertain what they are telling us, since buyers are still looking at getting involved in value areas of support across all the indices," Baiynd said.

As both the E-mini S&P 500 and the S&P 500 stagnate, traders have to "find alpha somewhere and it seems to me that there is an undercurrent of movement out of the Russell 2000 and into the Nasdaq - as the S&P 500 stays sideways but does not lose support," she said.

As all the other indicators point to upside pressure, selling will hold until the important support levels fail and also do not "recapture those support levels at any bounces," Baiynd said.

"All important levels of support get retested in the formations," she said. "I'll be watching for the Russell 2000 to definitively breakdown as it shows the weakest formations of the group - to confirm further downside. Until then, we will continue to buy the dips across the board and watch resistance to take quick gains until the pattern breaks."

If the tax cuts which were proposed by President Donald Trump during the campaign are implemented, the Nasdaq-100 (NDX) stocks would be the primary beneficiaries, said J.J. Kinahan, chief market strategist for TD Ameritrade, an Omaha, Neb.-based online broker.

"One of the primary reasons for the 'Trump Jump' has been the tax proposal, along with deregulation," he said. "In looking at many of the companies that have a big hunk of cash sitting offshore, many of them are in the Nasdaq-100 and being able to repatriate along with a corporate tax rate reduction should help the stocks in that industry have an oversized benefit to them."

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