After yesterday's weak finish, the markets gapped down and small caps continued to lag badly with the Russell 2000 closing down 1.31% near the lows of day. However, the rest of the markets rallied back with the Nasdaq and S&P finishing near the highs of the day as breadth continues to look poor. The Nasdaq and S&P did still post losses for the day, but only closed down 0.22% each. After briefly breaking above $16 this morning, the VIX finished nearly flat at $15.08 with the rally back in equities. This afternoon we got the Fed minutes from the last meeting and they showed that Fed officials expect to raise rates again this year, but no clear timetable was given. There are only 2 more Fed rate decisions left this year on October 28th and December 9th, so it would be between those 2 dates if they do in fact raise rates again. Right now, the market expects it to be in December with about a 69% probability for a 25bps hike while odds favor no change for the decision on October 28th with about a 81% probability.
For tomorrow, nothing changes again for the Nasdaq as it continues to trade in its big primary daily uptrend (white). This will continue to be the only range to watch for now with resistance at 28,000-28,025 from the top of the range and support at 26,750-26,775 from the bottom of the range.
The S&P opened below yesterday's primary uptrend support along with its next 3 supports between 7,805-7,815 which then became resistances. On the rally back, it did get rejected at these levels as well, hitting a high of 7,807.02 before pulling back to close at 7,801.77. It did make a higher high yesterday, so it still starts a new primary uptrend for tomorrow.
Since it closed below all of its prior supports between 7,805-7,815 today, those will now be resistances on a rally attempt again for tomorrow. The first will be at 7,805-7,806 (orange), then 7,818-7,820 (blue), and 7,830 (yellow). If it does break through all of these, the next resistance would be at 7,865-7,867 (red) which would be new all time highs for it and would likely be the last daily resistance in play for tomorrow. Keep in mind that it also has weekly resistance around 7,850 (see the weekly update) which it failed to get through yesterday.
On another pullback, its new primary uptrend (white) will be support from the bottom of the range at 7,768-7,770. If it were to potentially gap down again below this level then it would become resistance. If it breaks/gaps below it, the next support will be from the bottom of its next uptrend (red) at 7,735-7,737. After that, it would have more support at about 7,720 from its prior downtrend (green). If none of those hold, the last 2 supports potentially in play on a larger sell-off would be at 7,690-7,695 (blue) and 7,680-7,685 (orange).
The Russell 2000 remains in its big primary daily downtrend, which is the only daily range that remains active right now. It made a rally attempt towards the top of the range yesterday but failed to break through it, so for now this continues to be the only daily range to watch. Resistance from the top of it will be at about 2,870 while support from the bottom of it will be at 2,685-2,690. Both are pretty far away again so it's likely it just continues to trade within this big range for now.
