This afternoon the Fed left interest rates unchanged and Jerome Powell noted further uncertainty in the economy and inflation from the Iran war. The odds for future rate cuts have continued to be pushed back and after today's FOMC decision the next rate cut is being priced in for June of 2027. Not only that but odds of a rate hike have increased.

The markets didn't like what they heard today and continued their sell-off after a brief bounce in the first half of the week. The sell-off was led by the rate sensitive small caps as the Russell 2000 closed down 1.64% while the Nasdaq lost 1.46% and the S&P lost 1.36%. All of the indexes finished near the lows of the day as well. The VIX closed up 12.16% at $25.09.

The bleeding in the Nasdaq stopped just shy of its prior uptrend support (blue) which was the retest of last Friday's failed breakdown. This was the first support I mentioned in yesterday's update which was at about 22,130. It didn't break through as it put in a low of 22,144.76. Since it didn't break through any of those daily trends, it does not start any new ones going into tomorrow.

For now this same uptrend (blue) will be the first key level to watch which will now be at about 22,140 for tomorrow which the Nasdaq closed just above today (22,152). So it's possible it gaps below it tomorrow, and the next support to watch would be its primary range (white) at 22,075. If neither of those hold, then its prior downtrends (purple and yellow) will both be support at 21,935-21,945. If there is a snap-back rally tomorrow then these same downtrends will be resistance at 22,720-22,730 which is about 2.5% away.

The S&P closed and broke below yesterday's primary uptrend, and it closed at the lows of day, but it still starts a new uptrend. However due to the weak finish it will need to gap up tomorrow to remain in its new primary uptrend (white). That key level to watch will be at about 6,632 which isn't that far from where it closed today (6,624.70). Since it's only about 0.1% away it's essentially a toss up for whether it opens above this support or not - unlike yesterday when I noted that it was likely to open below its support.

So that will be the first thing to watch tomorrow - where it opens. If it does open above 6,632 then that level will act as support on a pullback and the next resistance to watch will be 6,648 from its prior downtrend (blue). From there, in the snap-back rally scenario, the next resistance to watch would be at 6,715 from its next downtrend (purple). 

On the other hand, if the S&P fails to open above the first key level at 6,632, then that level becomes resistance on a rally attempt. From there the next support to watch on a continued pullback will be at 6,606 from its prior downtrend (yellow) and then 6,570 from its next downtrend (purple). If that does not hold either, then 6,515 could be in play from its next downtrend (blue). It's also worth noting that into the close this afternoon the S&P broke below weekly support and last week's lows (see the weekly update).

The Russell 2000 also broke and closed below yesterday's uptrend, and it closed at the lows of day as well, but also still starts a new uptrend. So it's very similar to the S&P's setup. This new uptrend (white) will be support/resistance at about 2,485-2,486 tomorrow. It closed at 2,478 today, so it's also possible it gaps over it as it's only about 0.3% away. If it can get that gap up tomorrow, then this 2,485-2,486 level becomes support and the next resistance level to watch will also be from this new uptrend at 2,550 on a rally attempt. Its prior uptrend (yellow) would also be resistance just above it at 2,552.

If it fails to gap back above the 2,485-2,486 level tomorrow then that level will be resistance on a rally attempt and the next support to watch would be at 2,445 from its prior downtrend (purple). If there's a big sell-off again then this same downtrend (purple) will be support again from the bottom of its range at about 2,390. For now those are the only two support levels to watch, and we'd have to wait and see how it closes for its next trend.