The markets gapped up this morning after there were reports of a potential ceasefire deal being worked on between the U.S. and Iran. These reports came out last night after the markets closed, and futures held their gains into today's market open. There were conflicting reports from Iran about the deal during the day as well as reports of more attacks on Iran's nuclear power plants this afternoon which caused the rally to fade. However, small caps still held up pretty well as the Russell 2000 closed up 1.23%. The Nasdaq and S&P also closed higher by 0.77% and 0.54%, respectively, but they had much weaker finishes. With today's rally the VIX settled down 6% to $25.33.
Tech was again the weakest, not by percentage, but it had another failed daily breakout. In yesterday's update I noted that its primary downtrend resistance (from yesterday) was just above 22,000. It opened right there at 22,006 this morning, broke above it and faded to close back below it at 21,929. This gives it that failed breakout which starts another downtrend for it. The good news is that its prior downtrends will be below its current price so those will now act as supports as long as we don't get another gap down below them.
The first level to watch tomorrow will be from today's failed breakout (orange) which will be at 21,915 which it closed just above today (21,929). If it can open above this level tomorrow then it will be support. The next resistance on a rally attempt will then be its new primary downtrend (white) at 22,045. If it breaks or potentially gaps above this level then it will start a new trend, but we'll have to wait and see how it finishes first. But, above its primary downtrend there will still be resistances from both its prior downtrend (yellow) and prior uptrend (purple) at 22,185-22,195.
If the Nasdaq fails to open above the first key level (orange) at 21,915 tomorrow then this level will be resistance on a rally attempt as it would be the retest of today's failed breakout. From there the next supports to watch on a pullback will be at 21,815 (blue) followed by its next downtrend (yellow) at 21,575. If neither of those hold then its next support will be from its new primary downtrend (white) at 21,330. If this support doesn't hold either, then its prior downtrends (orange and blue) would be back in play at the bottom ends of those ranges will be supports at 21,160 and 21,090.
The S&P gapped above yesterday's primary uptrend support and this morning it quickly faded, retested it, and held it. However, it ended up breaking through it later on the reports of Iran's nuclear power plants being attacked again. It did manage to rally back and close above it again, putting in a failed breakdown on the daily, though it was not a strong finish. Its new primary uptrend (white) will be support/resistance at about 6,612-6,613 for tomorrow. Since it closed at 6,591.90 today we'd need to see a 0.3%+ gap up in order to get back over it. It's not that far, so it is possible, but odds are not in its favor right now. And even if it does get that gap back over its primary support, its prior uptrends will still be resistance. The first resistance would be from yesterday's uptrend (orange) at 6,640 followed by its previous uptrend (purple) at 6,685. If we do manage to have a big rally then its primary uptrend (white) would be the next level to watch again from the top of the range at 6,780.
The Russell 2000 held up really well today, though it did get rejected right around its first resistance of 2,550 (blue) that I mentioned in yesterday's update. I entered puts this morning around 2,443, near the high of the day which was 2,547.93, and I took profits on the way down during the morning's pullback. It did not break through any of its trends today so it doesn't start any new ones for tomorrow.
So its primary uptrend (white) will be the first key level to watch again which will be at 2,539-2,540 for tomorrow. It closed at 2,536 today, just below it, so it's essentially a toss up for whether or not it opens above this 2,539-2,540 level tomorrow. If it can gap up again above that level, then it will act as support on a pullback. Otherwise it will be resistance on a rally attempt. If it does gap or break above it, then the next resistance to watch will be from its prior uptrend (blue) which it got rejected at today. That will be resistance again tomorrow at 2,593. If it breaks through that, then its primary uptrend comes into play again from the top of the range at 2,627. If we get another sell-off the big supports to watch will be from its prior downtrends (yellow and purple) at 2,423 and 2,362.
