Markets were lower today with small caps leading the way as the Russell 2000 closed down 1.31%. The Nasdaq also lost 0.89% and tech is lower after hours after Broadcom and Crowdstrike reported earnings. Right now both stocks are lower by about 11% and they're dragging other semiconductor and software names lower. The S&P, which was the best performing today, also fell 0.74%. With today's pullback in markets, the VIX only closed higher by 1.84% and finished just off of the lows of day. It had been up as much as 5.5% at the highs, but it faded despite the weak finish for markets.
The Nasdaq did break and close below its last primary daily uptrend, but it still does start a new uptrend. This was a weak finish today and it will have to gap up tomorrow to open above its new primary uptrend (white) which will be at about 26,660-26,670 tomorrow. That is just a hair above today's close at 26,853 so it is possible that it opens above it despite the current after hours action. If it can open above it, then that 26,660-26,670 area will be the first support to watch and if we get a bounce back tomorrow then the only resistance in play will be from its prior uptrend (orange) at about 27,165.
If the Nasdaq fails to get that gap back up tomorrow above its primary uptrend support, then the 26,660-26,670 area will be resistance on a rally attempt. From there, on a continued pullback, the only support likely in play for tomorrow will be from its prior downtrend (blue) right around 26,600.
The S&P similarly broke and closed below its last primary uptrend support, but it started a new uptrend as well. However, because it finished near the lows of day today, it will also have to gap up again tomorrow to open above its new primary uptrend (white) which will be at 7,570. This is only about 0.2% away from today's close, but it's lower after hours. If it can manage to gap back over 7,570 tomorrow then that would be the first support to watch on a pullback. On a continuation of the rally the next resistance to watch would be from its prior uptrend (blue) at about 7,624 and the last daily uptrend would be at 7,655 (yellow).
If the S&P does fail to get the gap back over its primary uptrend at 7,570 tomorrow, then that will be the first resistance to watch on a rally attempt. Right now there are no other support levels below it that will be in play for tomorrow. If it breaks/gaps below the current primary uptrend (white) then it will start a new trend heading into Friday's session but we'll have to wait to see how it finishes first to determine the direction of it.
The Russell 2000 gapped back below its primary downtrend support that it started yesterday and it didn't break through it, so it doesn't start any new trends heading into tomorrow. Now this was the pullback I was looking for, but unfortunately I didn't hold my IWM puts overnight due to yesterday's strong finish.
For tomorrow, if there's a bounce back, the first resistance to watch will be from its primary downtrend again at about 2,918. If it breaks through that, the last resistance to watch will be from its prior uptrend (purple) at about 2,938. Meanwhile on a continuation of this pullback, the only support to watch will be from its primary downtrend (white - bottom of the range) at about 2,855.
