This afternoon we got the long awaited Fed rate decision under the new Fed Chair Kevin Warsh. The Fed left rates unchanged, which was expected with a near 100% certainty, so there was no surprise there. However, there was a dramatic shift in the Fed's tone as they signaled a new path forward and essentially took rate cuts off of the table. The dot plot showed that half of the Fed members want a rate hike, although Kevin Warsh did not participate in it himself. Market odds have shifted dramatically after today's decision and presser, and as of right now the market is pricing in a 25bps hike for the September 16th meeting. This is a big shift from potential rate cuts to now pricing in a hike within the next two meetings.

Source: CME Group

The markets initially rallied during Kevin Warsh's press conference, but sold off and finished near the lows of the day as yields and the Dollar spiked. The 10 year treasury yield finished up about 1.4% near the highs of the day and back near 4.5% while the Dollar also jumped almost 1% which sent precious metals and stocks lower.

The Nasdaq was the worst performing index today, closing down 1.34% while the S&P lost 1.21%. The Russell 2000, despite being the most rate sensitive, was the best performing but it also closed lower by 0.72%. The VIX jumped a little more than 12% with today's market sell-off to close at $18.44 which was near the highs of the day. Tomorrow will be the last trading day for this week as markets will be closed on Friday for the Juneteenth holiday.

This morning the Nasdaq did get the gap up above its prior downtrend support but broke through it during the sell-off. While it invalidated this prior trend with today's move, it didn't break through its primary uptrend so it doesn't start any new trends for tomorrow. Its primary uptrend (white) will be the first support level to watch tomorrow which will be at about 25,650. If it doesn't hold, the last support likely in play for tomorrow would be from its prior sideways range (purple) at 25,200-25,225.

If the markets do bounce back, the only resistance level to watch for now will be from its primary uptrend (white) at 27,000-27,025. However that level is nearly 4% away and is unlikely to be tested tomorrow.

The S&P also remained within its primary uptrend today so it doesn't start any new trends for tomorrow either. If we do get a bounce back tomorrow, the only resistance likely to be in play will be from its prior uptrend (blue) at 7,550-7,555 which is almost 2% away. It would have more resistance from its primary uptrend (white) around 7,650 however this is about 3% away and is very unlikely to actually be tested.

On a continuation of today's pullback, the first support to watch will be from its primary uptrend (white) at 7,375-7,380. If that doesn't hold, the next support would be from its prior uptrend (blue) at about 7,305 and the last support to potentially be in play would be from its prior downtrend (yellow) at 7,275-7,280.

The Russell 2000 got right down to its primary uptrend support at about 2,909 which I mentioned in yesterday's update. The low of the day was 2,910.95 so it didn't break through it, which means it also doesn't start any new trends for tomorrow.

Since there was a weak finish near the lows of day today, the Russell 2000 would need to gap back up tomorrow morning for its primary uptrend (white) to remain as support. That level will be at about 2,927 tomorrow which is about 0.3% away. If it can get that gap back over it, then the 2,927 level will remain as support. From there, the only resistance likely to be in play on a rally attempt would be from its prior uptrend (blue) which is right around 3,000 and is nearly 3% away. There would be more resistance from its primary uptrend (top of the range) at 3,050-3,055 but this is pretty far and it's unlikely that it actually gets tested.

Now if the Russell 2000 fails to get the gap back over its primary uptrend (white) at 2,927 tomorrow morning then that level will act as resistance on a rally attempt. From there, the only other daily support likely to be in play on a continuation of this move lower will be from its prior downtrend (yellow) at about 2,840. This would be about another 2.5% away. That is also right around the first weekly support of 2,845 (see the weekly update). The next support would be from the bottom of this same trend (yellow) at 2,710-2,715 which is about 4.5% away - and that is also unlikely to get tested.