Futures were lower overnight but they spiked early this morning on reports that the U.S. and Iran had 'productive' talks as well as President Trump saying that he would be pausing strikes on Iran's energy infrastructure for five days. These reports sent futures soaring and markets had a big gap up at the open. Oil also sold off sharply on the reports, falling as much as 17% from its overnight highs. Small caps were the big winner today as the Russell 2000 closed up 2.29% while the Nasdaq and S&P gained 1.38% and 1.15%, respectively. While these were big gains for the day, the markets were well off of their highs. At the highs, the Russell 2000, Nasdaq, and S&P were up 3.7%, 2.5%, and 2.2%. The VIX also closed down just 2.35% due to the big fade in the markets off of their highs.
The Nasdaq had the weakest finish, not as a percentage, but it put in a failed breakout on the daily which starts a new downtrend for it. For tomorrow the first resistance level to watch will be at 22,025 which will be the retest of today's failed breakout (blue). After that, its next resistance will be from its new primary downtrend (white) that it started today and that level will be right around 22,100. If it can clear through this primary downtrend it will start a new range, but we'll need to wait and see how it closes tomorrow. But it will still have more resistances from its prior uptrend (purple) at 22,170 and then its prior downtrend (yellow) at about 22,300.
On a pullback, the its weekly support will be the first level to watch at 21,735 (see the weekly update). But its next daily support will be at about 21,685-21,690 from its prior downtrend (yellow). If that does not hold then its new primary downtrend (white) will be the next big support at 21,340 followed by its prior downtrend (blue) right around 21,300.
The S&P broke and closed above its prior primary downtrend and starts a new uptrend going into tomorrow. However, due to the big fade and close near the lows, it's very unlikely that it opens above this new uptrend support tomorrow. The key level to watch for tomorrow will be from its new primary uptrend (white) which will be at about 6,660 tomorrow. Since it closed at 6,581 today it would need to gap up 1.2% to open above this new support. So odds are it will open below/outside of it in which case the 6,660 area would be resistance on a rally attempt. Its next resistance would be just above that as well at 6,665 from its prior uptrend (purple) which it got rejected at today. In the last daily update I mentioned that 6,652 area would be the last resistance to watch if we get a snap-back rally today which is right where it got up to this morning (6,651.62). Since it didn't break through that prior uptrend, the resistance remains valid for now.
On a pullback tomorrow, the first support to watch will be at 6,510 from its prior downtrend (yellow). After that its next downtrend (blue) will be support at 6,485. These same two ranges will be support again at the bottom end of the ranges at 6,410 and 6,360 in a worst case scenario sell-off.
The Russell 2000 had the strongest finish for the day and it also started a new uptrend, but similar to the S&P it's unlikely that it will get a big enough of a gap up to open above its new primary uptrend support which will be at about 2,508. This is only about 0.6% away so it is possible it gets that gap above it, but still the odds are in favor of it opening below it. If it does manage to get that 0.6% gap up above 2,508 then that level will act as support on a pullback. From there the only resistance to watch would be from this same uptrend, but from the top of the range at 2,582.
If it fails to get that gap above 2,508 then that level will be resistance on a rally attempt. The first support on a pullback to watch will be from its prior downtrend (yellow) at 2,460 followed by its next downtrend (purple) at 2,423. These same trends will be support at the bottom ends of the ranges which will be at 2,385 (yellow) and 2,355 (purple).
