The markets gapped down again this morning with the Nasdaq down as much as 1.4% and the Russell down 1.3% while the S&P was down as much as 1%. The opening gap down was essentially the low of the day for markets as they began recovering right away and mostly chopped around. In the afternoon however there were comments from Israeli's Prime Minister Benjamin Netanyahu regarding the situation in Iran and the Strait of Hormuz which sent oil lower and markets rallying. While the Nasdaq and S&P still closed lower by about 0.28%, it was well off of the lows. Small caps on the other hand led the comeback and the Russell 2000 closed higher by 0.65%. The VIX also closed lower by 4.11%, settling at $24.06 after the rally back in markets.
The Nasdaq did bounce off of its primary weekly support this morning (see the weekly update) which was around 21,860, and it also rallied back to close just above yesterday's primary daily range - giving it a failed breakdown. However, it also made a lower low which still starts a new downtrend for it on the daily time frame. It is at the bottom of this new range already, so there is potential room to bounce here but its prior ranges will still act as resistance on any rally attempts. The first level to watch will be from its prior sideways trend (yellow) that it rallied back to close above today. That level will be at about 22,080 which it closed just above today (22,090). If it opens above this 22,080 tomorrow then it will act as support, and vice versa if it opens below it. The next level to watch will be from its prior uptrend (purple) at about 22,150 which it could also potentially gap above. If it can, then that would also act as support, otherwise it will be resistance on a rally attempt. Finally its new, primary downtrend (white), will be resistance right around 22,400 on a rally.
If the sell-off resumes tomorrow, the only support to watch for now is from its new downtrend (white) that it started today. That will be support at about 21,800 which is also below its weekly support that it held today. It is worth noting that the Nasdaq did break below its primary monthly support at about 21,925 today (see the monthly update). We will need to see how it finishes the month off and whether or not it can close back above it. But, it did make a lower low (below the November 2025 low) which means it will start a new downtrend regardless of whether it can rally back to close above that support or not. At this point it's about how steep that downtrend will be and if it's a failed breakdown or not.
The S&P broke and closed below yesterday's uptrend, starting a new downtrend for tomorrow. Its new primary downtrend (white) will be resistance at 6,606 tomorrow which is right where it closed at today. So it's essentially a toss up for whether it opens above or below this downtrend tomorrow. If it does gap over it, then that level will be support on a pullback and if not, it will remain as resistance. If it does gap or break above it, then the next resistance to watch will be at about 6,621 from its prior downtrend (purple). If it breaks through this level, or even potentially gaps above it, then the next resistance would be at about 6,642 from its prior uptrend (yellow). If we do get another sell-off then the next support level to watch will be from its primary downtrend (white) which will be at about 6,508 tomorrow.
The Russell 2000, which led today, rallied back to close above yesterday's uptrend after it gapped below it this morning. This gives it a failed breakdown similar to the Nasdaq's setup, and it still does start a new downtrend due to the lower low that it made. But, this new primary downtrend (white) will be support/resistance at 2,485 tomorrow which it finished above today at 2,494.71. So odds are that it opens above this new downtrend tomorrow. There is still a possibility it gaps back below it as it's not that far, but as long as it doesn't then it would act as support on a pullback. The next key level to watch will be at 2,493 which is from its prior uptrend (yellow) that it reclaimed today. It also closed just above this level today, and it may open above it tomorrow in which case this level would be support as well. The next big resistance to watch on a rally attempt tomorrow would be from the top of this same range (yellow) at 2,556.
In the event of a gap back down below its primary downtrend at 2,485 and sell-off then the next support to watch would be from its prior downtrend (purple) at 2,427 followed by its primary downtrend (white) again at 2,417.
