Last week the rotation out of tech continued as the Nasdaq fell 4.6% while money continued to flow into small caps with the Russell 2000 gaining 1%. The S&P also closed lower by nearly 2% for the week while the VIX closed up almost 10%. This week we will be going into a short trading week with markets closed on Friday, July 3rd, in observance of Independence Day on Saturday, July 4th.
While this week will be a short trading week, there are a couple of big catalysts to watch. The first will be Kevin Warsh's speech on the policy panel at the European Central Bank's annual Forum on Central Banking. This will take place on Wednesday at 4:00 AM ET when U.S. markets are closed, but his comments may move futures markets overnight leading into the U.S. open. Then on Thursday morning at 8:30 AM ET we will get the June jobs report. Month-over-month nonfarm payrolls are expected to come in at +114,000 vs the previous +172,000 while the unemployment rate is expected to remain unchanged at 4.3%.
From a technical perspective, the Nasdaq broke down again last week and closed well below its previous uptrend, starting a new weekly downtrend for it. The first support to watch will be from its prior downtrend (blue) at about 24,500. If that doesn't hold, its new primary downtrend (white) will be the last support likely in play at 24,350-24,375.
If there's a rally back this week, the only resistance to watch for now will be from its new primary downtrend (white - top of the range) at 26,375-26,400. Given that it is a short holiday week, it may not break any of these levels and it could simply remain in its primary range for now.
The S&P nearly got to its primary weekly support during Friday morning's sell-off, but it did not break through it so it doesn't start any new trends for this week. Its primary uptrend (white) will again be the only support to watch and that level will be at 7,275-7,280 for this week. If it breaks through, it will start a new trend going into the following week but we'll first have to wait to see how it closes to determine the direction of that new trend.
On a rally back, the only resistance that will be in play will also be from its primary uptrend (white - top of the range) at 7,670-7,675. This is over 4% away so it may not actually get there even if there is a big rally attempt given the short holiday week.
The Russell got rejected close to its primary weekly uptrend last week but also didn't break through it, so similar to the S&P 500, it doesn't start any new trends for this week. It will continue to have several resistances overhead with the first one being at about 3,064 from its primary uptrend (white). After that, it will have more at 3,067 (yellow) and then 3,075-3,080 from both of its next uptrends (purple and blue) where they intersect.
On a pullback, these uptrends will also act as supports. The first one will be from its prior uptrend (yellow) at 2,896-2,897 followed by its next uptrend (blue) at 2,887. The last support to watch will be from its primary uptrend (white) at 2,869-2,870.
