The markets continued their rally today with tech leading as the Nasdaq closed up 1.52% while the S&P added 0.79%. Small caps lagged again, but the Russell 2000 also finished higher by 0.46%. The VIX lost another 6.8% to close at $16.45. Tomorrow morning Kevin Warsh will be speaking at the European Central Bank Forum on Central Banking at 9:00 AM ET and his comments may move markets.
Today the Nasdaq broke and closed above its last previous primary downtrend resistance. I noted in yesterday's update that a continuation of the rally to test this resistance was the much more likely scenario for markets today. Since it did break and close above it, it now starts a new trend. The Nasdaq did make a slightly lower swing low last week though, so this new trend is down, albeit very slightly - it is essentially a sideways range.
The first resistance to watch tomorrow on a continuation of the rally will be from its prior uptrend (purple) at about 26,500. If it can break through it, the last resistance will be from its new primary range (white) right around 26,700. On a pullback, the only support that will likely come in play is its prior downtrend (yellow) which it closed above today. That will be support at about 26,025-26,030 on a retest of today's breakout.
The S&P also broke and closed above its prior downtrend, but it made a higher swing low last week, so it starts a new uptrend now. But, the first resistance to watch tomorrow on a continuation of the rally will be at 7,565-7,570 from its prior uptrend (blue). If it can break through this level, the last daily resistance to watch will be from the new primary uptrend (white) at 7,615-7,620.
On a pullback, the first support to watch will be from the downtrend it closed above today (orange) at 7,445-7,450 which would be a retest of today's breakout. If that doesn't hold, the last daily support potentially in play tomorrow would be from its new primary uptrend (white) at about 7,305.
The Russell 2000 had a failed breakdown yesterday which started a new downtrend for it, but it did open just above that downtrend this morning and it held the retest support on the early pullback this morning. It also closed above yesterday's downtrend which now gives it a new daily uptrend for tomorrow. However, it will need to gap up tomorrow to open above its new primary uptrend (white) which will be at 3,031-3,032. If it can get this gap up, it will act as support and the next resistance to watch will be from its prior uptrend (yellow) at 3,055. After that, the last two resistances would be at 3,070-3,075 from both its prior uptrend (blue) and its new primary uptrend (white).
If it fails to get the gap above its primary uptrend (white) at 3,031-3,032 then that level will be resistance tomorrow. The first support to watch on a pullback will then be at its prior uptrend (blue) at 3,007-3,008. If that doesn't hold, the last two supports will be from its prior downtrend (orange) at 2,995-2,997 (top of the range) and 2,950 (bottom of that range).
