Stocks once again attempted a rally this morning after CPI came in slightly cooler than expected. Month-over-month core CPI came in at +0.2% vs +0.03% expected while everything else was in line. Futures did rally on this initially and markets were up in the morning with the Russell 2000 up as much as 1.3% at the highs of day. However, the rally reversed quickly again and markets finished near the lows of the day. Tech was the weakest again with the Nasdaq closing down about 2% while the S&P lost 1.6% and the Russell 2000 closed down 1.1%. Part of the sell-off was due to escalating tensions between Iran and the U.S. again as President Trump said that they will attack Iran again. Oil jumped over 4% on the news back near $92/barrel. The VIX also jumped nearly 12% to settle at $22.22 with today's market sell-off. This is the highest close for the VIX since April 7th and the VIX structure entered backwardation on June 5th which it remains in.
The markets remained in their primary downtrends today so none of the indexes start any new daily downtrends for tomorrow. For the Nasdaq, the first level to watch on a bounce will be at its prior uptrend (yellow) at about 25,285 and then its primary daily downtrend (white) would be its last resistance in play for tomorrow at about 25,575. If it breaks through it, it will start a new trend, but we'll need to see how it closes first.
If the sell-off continues, the first support to watch will be from its prior uptrend (purple) at about 25,170. This is essentially where the Nasdaq closed today, so if it gaps down tomorrow this 25,170 area would be resistance on a rally attempt. After that these same two prior uptrends would be support from the bottom of the ranges at 24,840-24,850 (yellow) and 24,780-24,790 (purple). If neither of those hold, its last daily support will be from its primary downtrend (white) at about 24,300.
For the S&P, its first resistance level on a bounce will be from its previous downtrend (yellow) at about 7,315 tomorrow. If it breaks through, the next resistance will be at about 7,350 from its primary downtrend (white). The last resistance potentially in play for tomorrow will be from its next downtrend (blue) at about 7,425.
On a continuation of this sell-off the first support to watch will be from its prior downtrend (blue) at about 7,178-7,180. After that, its prior sideways range (purple) will be support at about 7,150 followed by its next downtrend (yellow) just below that at about 7,142. The last support to watch will be from its primary daily downtrend (white) at about 7,105.
The Russell 2000 got rejected just below its primary daily downtrend resistance around 2,909 this morning during the early rally attempt. This was the key level I said to watch out for in yesterday's update which was the only resistance above it. It failed to break through it as it put in a high of 2,095.28 before the reversal.
That primary downtrend (white) will again be the only resistance to watch tomorrow which will be at about 2,895-2,900 on another rally attempt. On a continuation of the sell-off, the first support to watch will be from its prior downtrend (purple) at 2,790-2,795 followed by its primary downtrend (white - bottom of the range) at 2,770-2,775. If that doesn't hold, its last support will be from its prior downtrend again (purple - bottom of the range) right around 2,700.
