Yesterday the markets bounced but finished weak after the Treasury Department announced that it would more than double the size of their government debt repurchases. This sent yields lower yesterday, but they bounced back today with the 10 year closing in on 4.7% again. Scott Bessent in fact doubled down on his statements and said today on CNBC that the Treasury would purchase even more than their originally stated $4B of their long term operations. This however did not provide any relief in yields or markets as they continued to sell-off throughout the afternoon. Oil also jumped again, settling above $86/barrel, which continues to stoke inflation fears resulting in higher yields.

The rate sensitive Russell 2000 was the worst performing index today, closing down 1.34%. The Nasdaq lost 1%, although semis were actually a bright spot in today's session with SMH and SOXX both finishing positive. The S&P also fell 0.87% and finished at the lows of day. With today's sell-off, the VIX reclaimed $16 for a 7.5% gain. 

In yesterday's update I noted that we needed to see a gap up this morning in order to gap above the primary downtrends for the indexes, specifically the Nasdaq. Futures were mostly higher overnight but sold off into the market open and the Nasdaq failed to get the gap up above its primary downtrend. It initially did get a bounce off of that primary downtrend early in the morning, but broke through it later in the day which now starts a new primary downtrend for it again.

For tomorrow, the first key level to watch for the Nasdaq will again be right around today's close of 26,067. This is essentially where its new primary downtrend (white) will be for tomorrow around 26,065. So similar to yesterday, tomorrow's open is very important. If it can open higher then this primary downtrend and the 26,065 area will act as support. From there on a rally attempt its prior downtrend (orange) will be the first resistance level to watch around 26,290. If it can break through it, the last resistance in play would be from its prior uptrend (blue) around 26,335.

If the Nasdaq gaps down again below its primary downtrend around 26,065, then this level will act as resistance on a bounce attempt and the next support to watch will be from its previous downtrend (orange) at about 26,020. If it breaks through this or even potentially gaps below it, then the last daily support to watch will be from its primary downtrend (white) around 25,800.

The S&P got right down to its primary downtrend support at 7,635-7,640 which was the last support I mentioned in yesterday's update to watch out for. It didn't break through it, so it doesn't start any new trends for tomorrow. The first level to watch tomorrow will be at about 7,647 which is its prior downtrend (blue) that it closes below today. The S&P closed at 7,641 today, so there is potential for a gap back above 7,647 and that prior downtrend in which case it would act as support on a pullback. In this gap up scenario, the next resistance to watch would then be from its primary downtrend (white) around 7,693 on a rally attempt.

If the S&P fails to get that gap up, the 7,647 area from its prior downtrend (blue) will act as resistance on a rally attempt. On a continued pullback, its primary downtrend (white) will be the next support to watch at 7,612-7,613. If this doesn't hold, the last daily support likely to come into play will be from its prior sideways range (purple) around 7,585-7,587.

The Russell 2000 finally broke through its primary uptrend that it had been trading in since the beginning of August. It broke and closed below it, but for now still starts a new primary uptrend (white). The 2,977-2,978 area will be the first key support to watch from both its new primary uptrend (white) and its prior downtrend (blue) where the two intersect. This will likely be the only support level in play for tomorrow and it will be a big one as it is from both of those trends.

On a bounce back, the only resistance level to watch for tomorrow will be from its prior primary uptrend (now orange) which it closed below today. That will be resistance around 3,015 for tomorrow.