There was blood in the markets today after returning from the long holiday weekend with a broad market sell off. The Nasdaq led the way lower with a decline of 2.12% while the S&P closed down 2.06%. Small caps continued to outperform, but the Russell 2000 also closed down 1.21% and ended its streak of higher highs. This was the biggest sell off for the markets since October 10th, 2025. The VIX only closed up 6.6%, but it was also up yesterday when futures were selling off and markets were closed. It's also now in backwardation as spot VIX is trading above the front month contracts.
Let's look at the daily technical levels after today's damage. Starting with the Nasdaq, it gapped below its primary uptrend support at 25,310 that I mentioned in the previous daily update. It never broke through it after the gap down, putting in a high of 25,279.80 today. So with the gap and close below the prior uptrend, it officially starts a new daily downtrend. But there is a silver lining here, and that is due to today's big sell off and gap down, today's low is where the new downtrend gets connected to - meaning that it technically is already at the bottom of the range in this downtrend. However this does not mean that it can't go lower, it just means that the next support level to watch isn't far. And that support for tomorrow is going to be at about 24,900-24,910 which is not much further away from today's close and lows. We'll have to see if this support can hold tomorrow and how we end up closing. But, being at the bottom of this range does set the markets up for a potential bounce - even though it's now in a downtrend.
The S&P also gapped and closed below its last daily uptrend support this morning, and similarly to the Nasdaq, it did not reclaim it. So it also now starts a slight daily downtrend going into tomorrow. But just like with the Nasdaq, due to the size of today's move and big gap down, the new downtrend (really more of a sideways trend) gets connected to today's low. So the next support level to watch will be just below today's low (6,789.05) at about 6,788. Since it did hold most of its losses and it's so close to this support there are a lot of potential scenarios for tomorrow. We could potentially see a gap down below this 6,788 support or an open above it and break down through it during the day. In either case, we'll need to wait to see how it closes if it does in fact break through 6,788.
Lastly for the Russell 2000, in the prior update I mentioned that its previous uptrends (see Friday's update) would act as supports around 2,670. The problem is that it gapped well below the 2,670 level this morning and so those became resistance instead as price was now below them. And it did get an early rally up to this 2,670 area where it got rejected. Now it did end up breaking below all of its supports, including its primary uptrend support. However, unlike the S&P and Nasdaq, it still starts a new daily uptrend here. It's also worth noting that it did not break through its weekly support this morning (see my weekend update). It got very close, but ended up holding, so it still looks the healthiest for now.
But for tomorrow's daily levels there will be a few to look at. The first support to watch from its prior uptrend (purple) will be at about 2,644 - just below today's closing price of 2,645.36 As long as it opens above it, it will act as support, and vice versa if it gaps below it tomorrow. Since it's so close to that level, it's really a toss up which way it ends up going. After that, the new uptrend support will be at about 2,635 which is just above today's low of 2,632.35. Those are the only 2 support levels to watch for now assuming there's no big gap again. Now resistances to watch on a potential rally tomorrow will be at about 2,660 (yellow) from its prior uptrend. And of course if we were to see a gap back above this level then it would become support. After that, the next resistance would be at about 2,678 (purple) and finally the new uptrend it started today (white) would be resistance at about 2,698 which would be new all time highs. This would require a significant snap back rally of 2% which is probably pretty unlikely at this point.
