Markets had a strong rally back on Friday to close out the week and the Dow Jones broke above 50,000 for the first time in history, hitting a new high of 50,169 as it gained over 1,200 points for the day. It was a broad market rally led by small caps as the Russell 2000 jumped 3.6%. Tech also participated with a gain of 2.18% as semis were very strong with the SOXX gaining 5.34% led by NVDA which was up nearly 8% on the day. The S&P also posted a gain of 1.97% and volatility got crushed with the VIX falling over 18%.
Even with the strong finish, the Nasdaq did still start a new downtrend on the daily (white). But because it was such a strong finish it will almost certainly open above this new downtrend on Monday. The level to watch will be at about 22,740 which is about 1.25% away. If there is a big gap down below that level on Monday then it would be resistance, but odds are it won't, so that level would be support on a pullback. Resistance will be at about 23,045 from its prior sideways range (yellow) which it did break through yesterday, but it didn't close above it. If it gaps above 23,045 then that level will be support on a retest. From there, the next big resistance level will be at about 23,380 from its next sideways range (purple) if we see a continuation of yesterday's big rally.
The S&P broke above both its primary downtrend (white) and prior secondary downtrend (purple) yesterday and closed above it as well. However just like the Nasdaq, the new trend that it started is still down. Odds are it will open above the new downtrend too, but there is greater risk of a gap below it since it's much closer than the Nasdaq's support is. So the level to watch from its new primary downtrend (white) will be at about 6,903 and its prior downtrend (purple) will be support at about 6,900. The S&P closed at 6,932 so these levels are only about 0.4% away which isn't that far given the current volatility in markets. For now we'll have to see how it closes on Monday for its next trend. If it closes above the 6,903 level then it will start a new uptrend on the daily going into Tuesday.
The Russell 2000 cleared through all of its daily downtrends as well, but still starts a new one for Monday as it was also making lower lows prior to yesterday's rally. But, just like with the S&P and Nasdaq, it was a very strong finish and odds are it will open above the new downtrend on Monday. The level to watch from its new primary downtrend (white) will be at about 2,653. It closed at 2,670 so this is about 0.6% away which it could still potentially gap below, and if that happens then this level will becomes resistance. But, as long as it opens above it then it will be support, and if it closes above it then it will start a new uptrend going into Tuesday. If there is a gap or breakdown below 2,653 on Monday, then the next support to watch will be significantly lower around 2,568 from its prior downtrend (purple).
