It was a bloodbath this morning with markets having their biggest one day sell-off since the 2025 tariff crash. The Russell 2000 was down nearly 4% at today's lows while the Nasdaq and S&P fell 2.7% and 2.5%, respectively. The VIX spiked just over 31%, hitting a high of $28.15, its highest levels since last November. Markets did recover well off of their lows, but they still posted significant losses for the day. The Russell 2000 closed down 1.79% while the Nasdaq closed down 1.02% and the S&P lost 0.94%. The VIX closed up about 10% after the markets recovered. Metals also pulled back with gold falling about 4% and silver falling over 7%.
This morning I noted on X/StockTwits that the Russell 2000 was approaching a big monthly support at 2,550 and the VIX at that point was up 30% which was also signaling capitulation. This ended up being the bottom of the day for markets as the Russell hit a low of 2,550.97 before sharp recovery. While the sell-off has intensified over the last few days, buyers have stepped in to buy the dip every time and despite the sharp sell-off we've actually closed higher after the gap downs each of the last three days in the Nasdaq and S&P which is a bit unusual.
We did get the big gap down this morning to get the Nasdaq and S&P to open below yesterday's primary downtrends, meaning those levels would be resistance rather than act as support on a pullback. The Nasdaq did rally back and break just above that downtrend which was around 22,570, but it failed to close above it. This is another failed breakout which starts a new downtrend. But, it was a strong finish and odds are it opens above it tomorrow. However, just like yesterday when odds were in its favor to open above resistance, we ended up getting a big gap down back under it. With volatility so high right now we could see the same thing happen tomorrow. The first key level to watch will be at about 22,400 from its new primary downtrend (white). It closed at 22,516 today, well above that level, so as long as it doesn't have that big gap down again then that level will act as support on a retest. Its previous downtrend (yellow) would also be support at about 22,335 assuming it does not gap below it. If it does gap or break below these levels, then the next big support will be from its new downtrend again at about 21,900 if we see another big sell-off. And it's prior downtrend (yellow) would be support again just below that at about 21,840. If we do see a breakout to the upside, then the next resistance to watch will be at about 22,850 from the prior uptrend (purple).
The S&P put in another failed breakdown on the daily as it broke well below yesterday's primary downtrend and closed back over it. Since it did make a lower low, it still starts a new downtrend. The key level from this new downtrend (white) will be at about 6,750 tomorrow which it closed significantly above today at 6,816. So again, odds are that it opens above it, but a big gap down would negate that again. As long as it does open above 6,750 then it will act as support on a pullback and retest. If it gaps or breaks below it, then the next support to watch will be at about 6,725 from its prior downtrend (blue). If that doesn't hold either, then its last downtrend support would again be from the new downtrend at about 6,625. If we do get a continued bounce tomorrow, resistances to watch will be at about 6,830 from its prior downtrend (blue) and then its prior uptrends will come into play at 6,848 (yellow) and 6,865 (purple).
The Russell 2000 also put in a failed breakdown, but also starts a new downtrend as it put in a lower low. Similarly to the S&P and Nasdaq, odds are it opens above this new downtrend barring a large gap down again. But, the first key levels to watch will actually be from its prior trends, not its new primary downtrend (white). The first supports will be at 2,595-2,596 from both of its prior downtrends (blue and yellow) which are nearly identical. After that its prior (purple) downtrend will be at about 2,585. Its new, primary downtrend (white), will be last at about 2,578. If it gaps or breaks below these supports then the last big level to watch will again be from its primary downtrend at about 2,505 - the bottom of the range. It has a lot of upside to the first resistance if we get a rally which will be from its prior downtrend (purple) at 2,665. After that, its prior downtrends (blue and yellow) will be resistance at 2,676-2,677.
