E-Mini NASDAQ-100 (NQ) Futures Index Analysis – January 4, 2013

The March E-mini NASDAQ futures contract is expected to open steady-to-better after the release of a basically flat Non-Farm Payrolls report. The fact that the unemployment rate was adjusted higher may be the catalyst behind a rally today since it diminishes the thought expressed by the Fed’s December minutes that the central bank’s asset buyback program may come to an end sooner –than-expected.

On Thursday, the NASDAQ formed a potentially bearish closing price reversal top on the daily chart. This chart pattern typically leads to the start of a 2 to 3 day break equal to at least 50% of the last rally. The key is the follow-through. If bearish traders cannot pressure the market through yesterday’s low at 2719.00, then the market may reverse course and resume the current uptrend.

Based on the short-term range of 2580.00 to 2747.00, a confirmation of the closing price reversal top could lead to a break to 2663.75 to 2644.00 over the near-term.  After breaking the low at 2719.00, the first test of support will be at 2676.00.

A failure to confirm the reversal top could lead to a breakout through 2747.00. This move will negate the reversal and set up the market for further upside action. The most likely target is 2773.00 to 2773.25. Watch for a technical bounce on the first test of this resistance cluster.

If the NASDAQ can overcome the selling pressure at 2773.00 to 2773.25 then look for an acceleration to the upside with 2830.00 a potential upside target.