The markets continued their rally again on Friday which was led by tech as the Nasdaq gained another 1.63% and once again hit new all time highs. Intel reported blowout earnings which sent the stock higher by nearly 24% and other semis rallied in sympathy as SOXX and SMH both gained about 5%. The S&P also hit a new all time high and added another 0.8%. Small caps lagged the rest of the markets, but the Russell 2000 still posted a gain of 0.43% on the day. The VIX lost another 3% to close at $18.71, but this level remains elevated considering the markets are at all time highs.
In Thursday's update I mentioned that there was bearish divergence for the Nasdaq and S&P, but not to be worried yet as price action remained bullish. There would need to be at least one more divergence for me to start to get concerned of a pullback, and we'll see if it happens this week.
For now, the Nasdaq started a new daily uptrend on Friday as it broke and closed above its prior uptrend. This new primary uptrend (white) will be the first level to watch tomorrow which will be at about 24,850. Since the Nasdaq closed at 24,836 on Friday, it will need to gap up a little to open above this new primary uptrend. If it does, then the next resistance to watch on another rally will be at about 25,100 from is prior uptrend (orange).
If the Nasdaq fails to open above its primary uptrend at 24,850 tomorrow, that level will become resistance on a rally attempt. The first support to watch on a pullback would then be at about 24,800 from its prior uptrend (teal). If that doesn't hold, its next uptrend (yellow) will be support at 24,550. If there's a larger sell-off then its next support would again be from its teal uptrend (bottom end of the range) around 24,300.
The S&P also started a new uptrend as it broke and closed above Thursday's primary uptrend. However, it will also need to gap up to open above its new primary uptrend (white) tomorrow. That level will be at about 7,180, which is about 0.2% away from Friday's close of 7,165. If it can get that gap up, the 7,180 level will act as support on a pullback and the next resistance to watch will be at about 7,280 - also from its primary uptrend.
If it fails to get this gap above 7,180 tomorrow then that level will act as resistance on a rally attempt and the first support to watch on a pullback will be at 7,158-7,159 from its prior uptrend (blue). After that the 7,115-7,120 level will be bigger support from both its prior downtrend (yellow) and uptrend (purple) which is where they both intersect.
The Russell 2000 broke just below Thursday's primary uptrend at 2,764-2,765 which I mentioned in the prior update as the first support to watch. It hit a low of 2,762.23 before rallying back to close at 2,787 which gives it a failed breakdown on the daily. This failed breakdown starts a new primary uptrend (white) for tomorrow. But its first support to watch will be on the retest of Friday's failed breakdown (orange) which is at about 2,787 and right where it closed on Friday. If it opens higher tomorrow then this level will act as support on a pullback with its new primary uptrend (white) just below it at 2,783. Both of these levels will be support as long as it opens above them. On a rally attempt, the 2,480-2,483 area will be resistance from both of its prior uptrends (blue and yellow).
If the Russell 2000 fails to open above the first support at 2,787 or its primary uptrend at 2,783 then these levels will act as resistance on a rally attempt. And on a pullback the next support to watch would be from its prior uptrend (purple) at 2,750.
