Markets sold off sharply last week after Trump's tariff threats against the EU rattled investors, but it was quickly de-escalated after it was reported that there was a framework for the Greenland deal and Trump said that he would not try to take Greenland by force or impose the EU tariffs that he had threatened on February 1st. There was a sharp rally back in the markets, especially tech, which closed up for the week. The Nasdaq gained 0.3% while the S&P and Russell 2000 lost 0.35% and 0.3%, respectively. Small caps were the leader early in the week, but in my prior daily updates I mentioned that I was looking for a rotation out of small caps and back into tech prior to Friday's big sell off in small caps where the Russell fell 1.82%. This week tech will be back in focus with AAPL, META, MSFT and TSLA all set to report earnings.
Looking at the technicals for this week, the Nasdaq did put in a failed weekly breakdown as it broke through its last uptrend support (blue) but rallied back to close above it. Since it did make a lower low, it starts a new downtrend. However, because it did finish so strong it will likely gap above this new downtrend tomorrow. That new downtrend support/resistance will be at about 25,400. Since the Nasdaq closed at 25,605 it's likely that it opens above it. In the event that there is a large gap down tomorrow below 25,400, which is about 0.8% away, then it would be resistance. The other key levels to watch will be at about 25,580 (blue) which was last week's final uptrend that it broke below. It is possible that it gaps below this level as it's just below where it closed on Friday. So if it does gap below it, then that level becomes resistance and vice versa if it opens above it. The next resistance to watch will be at about 25,840 (yellow). This is almost 1% away so it's unlikely we see a gap above it. Now if there is a big sell off this week then the key support level to watch will be at about 24,640 which will be support from the new downtrend (white). That level is pretty far so I think it's pretty unlikely that we get there. Although, there are lots of catalysts with the big tech earnings this week.
The S&P closed just below its prior weekly uptrend support at 6,925 that I mentioned in last weekend's update. Since it did make a higher high prior to this pullback, it does still start a new uptrend (white). And last week's finish wasn't weak, so it wouldn't surprise me to see a retest of the top of this new range rather than a sell off towards the bottom of it. But, the first resistance to watch will be at about 6,970-6,975 from the prior uptrend (purple) that it broke through last week. If it can clear through this resistance then the new uptrend will be resistance at about 7,030 which would be new all time highs. On the other hand, if we do get a sell off, then support from the new uptrend would be at about 6,690 from the new uptrend - and this support would be for this week. That level is about 3% away and even with a pullback we may not get there this week. For the following week, that uptrend support would be at about 6,705 and then about 6,725 for the week after that and it will continue to rise as it is an uptrend.
For the Russell 2000, it played out pretty much perfectly this week. The levels that I said to watch for in last weekend's update were 2,628 on a pullback and retest. The low of the week was 2,632.35 on that early retest during the EU tariff sell off early in the week. And the resistance I said to look for was 2,725-2,730 which it broke just above and put in a high of 2,735.10 before Friday's big reversal. Now since it did break just above that 2,725-2,730 area and failed to close above it - it now has a failed weekly breakout. However, due to the higher it, it still starts a new uptrend. This new uptrend from the failed breakout (white) will provide support at about 2,645-2,650 this week. Since the Russell closed at 2,669 it will probably open above it. There would need to be a significant gap lower of almost 1% to open below it. If that were to happen, then the 2,645-2,650 area would be resistance. After that, the next support to watch will be at 2,620-2,625 which will be support from both the prior uptrend (blue) and its prior downtrend (yellow), so this would be a big support area to watch on a continued pullback. Resistances to watch would be from the top of the prior uptrend (blue) at about 2,765 and then the new uptrend (white) would also be resistance at about 2,775-2,780 if we were to resume the small cap rally.
