The markets had a big snap-back rally today that was led by tech as the Nasdaq closed higher by 3.83%. Small caps were also very strong with the Russell 2000 gaining 3.41% while the S&P jumped 2.91%. The VIX got crushed, closing down 17.5% at $25.25. In the afternoon there were reports that Iran was ready to make a deal to end the war and that talks were progressing, this helped fuel the rally even more in the afternoon. However, even with hopes of the war ending soon, oil didn't seem to believe the news as it only fell 1.28%. In my previous updates I mentioned that the markets were setting up for a relief rally this week and for now that's exactly what it looks like, so I would still be very cautious going forward.
The markets did gap above yesterday's primary downtrends this morning, which also helped fuel the rally from a technical perspective. The Nasdaq opened above it and never retested it, as it was pretty much straight up from the open. It was also a very strong finish as markets held nearly all of their gains. However, the Nasdaq still starts a new daily downtrend as yesterday it made a lower low.
Its new primary downtrend (white) will be support/resistance at about 21,420 tomorrow. It finished well above this level today at 21,590, so odds are it opens above this new downtrend tomorrow in which case the 21,420 area will be support on a pullback. Due to the current volatility in markets it is still possible we get another gap back below that 21,420 level which is about 0.8% away. If that happens it will be resistance again. Assuming it does open above it, then the next resistance to watch will be at 21,850 from its prior downtrend (yellow).
If we do get the gap back under its new primary downtrend (white) at 21,420 tomorrow then that level will be resistance and the next support to watch will again be from its prior downtrend (yellow) at 21,140. After that, its next downtrend (blue) would be support at 20,745 if we get another big sell-off.
The S&P also gapped above yesterday's downtrend and closed well above it, but it also started a new downtrend similar to the Nasdaq's setup. Its new primary downtrend (white) will be support/resistance right around 6,500 tomorrow. It finished today at 6,528 so there would need to be about a 0.4% gap down to open back under this primary downtrend. This is very doable given the current volatility, though odds are in favor of it opening above this level tomorrow in which case it will be support on a pullback.
If the S&P opens above 6,500 tomorrow, then the next resistance to watch will be from its prior downtrend (purple) at 6,590. If it gaps below 6,500 tomorrow, then the next support to watch will also be from its prior downtrend (purple) at 6,440. After that, its next downtrend (yellow) would be support at 6,330.
The Russell 2000 also gapped above yesterday's downtrend and had a strong finish, but unlike the S&P and Nasdaq, it starts a new daily uptrend today. The first support to watch on a pullback tomorrow will be at 2,482 from its prior downtrend (yellow) and then its new primary uptrend (white) that it started today will be support at 2,470. Resistance on a continued rally would be from its prior uptrend (purple) at 2,528 and then its new primary uptrend (white) would be in play again at 2,535.
In the event we see a gap below its new primary uptrend (white) at 2,470 which is about 1% away, then the next big support to watch would be from its prior downtrend (yellow) at 2,403. Its next downtrend (blue) would also be support just below that at 2,400.
