The Nasdaq and S&P were pretty flat today as the Nasdaq closed down 0.06% while the S&P finished with a loss of 0.18%. Small caps were the laggard with the Russell 2000 closing down 0.58%. Yesterday the VIX was notably weak during the market pullback, and we saw the same thing today as the VIX closed down 4.17% at $15.15. Even at the lows of day for the markets there was no bid in the VIX. As I've noted in the last couple of market updates, the markets needed to take a breather and consolidate the prior breakout/rally that we saw over the past week. The action is not bearish, I believe it is just setting up for a leg higher. The catalyst will be tomorrow's jobs report. The July nonfarm payrolls and unemployment rate is due at 8:30 AM ET.
Today the Nasdaq gapped down and bounced right off of its primary uptrend support at the 26,200-26,225 level with a low of 26,208.43. This was the big support area I said to watch out for on a pullback in yesterday's update. It didn't break through that primary uptrend, so it doesn't start any new trends for tomorrow.
Tomorrow the first resistance level to watch on a rally attempt will be from its prior uptrend (yellow) at 26,400-26,425. We could potentially see a gap above this level with the big jobs report in the morning. If it does gap above it, then that 26,400-26,425 level would become support. After that, the next and possibly last resistance in play tomorrow would be from its primary uptrend (white) at 26,850-26,875.
On a pullback, the first support to watch will be from its primary uptrend (white) at 26,250-26,275. If we gap below it on the jobs data, this level would become resistance. If it does open above it, but breaks through it, the last support would be from its prior downtrend (yellow) at 25,950-25,975.
The S&P continued to chop around in its big primary uptrend so it doesn't start any new trends for tomorrow either. The only resistance to watch will continue to be from its primary uptrend (white) which will be at 7,885-7,890 tomorrow. This is pretty far, so on a positive reaction and rally on the jobs data it's likely that it simply continues to trade higher within this primary uptrend, but not to the top of the range yet.
On a pullback, the first support to watch will be from its prior uptrend (blue) at 7,640-7,645. If it doesn't hold, the next support to watch will be from its primary uptrend (white) at 7,615-7,620. If it breaks down below this support as well, the last level to watch for tomorrow will be from its prior sideways range (yellow) around 7,585.
The Russell 2000 failed to get the gap up above its primary uptrend this morning, and it got rejected there on the early rally attempt. In yesterday's update I noted that if the Russell failed to gap back above the 3,035 level that this would be the resistance area to watch on a rally attempt. It did make that attempt early in the morning, putting in a high of 3,032.22 before selling off to finish near the lows of day. While it was a weak finish again, it still starts a new uptrend as it made a higher high yesterday.
For tomorrow, its primary uptrend (white) will be the first resistance level to watch at about 3,060 on a rally attempt. If it can break through it, the last resistance in play would be from its prior uptrend (green) at about 3,068. On a continued pullback, the first support to watch will be from its prior downtrend (orange) at 2,983-2,984. After that its primary uptrend (white) will be support at 2,958-2,959. If that doesn't hold, the last two daily supports to watch will be from its prior downtrends (purple and blue) at 2,935-2,940.
