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.