Apple had its worst day in nearly a year as it closed down 5% which was a big drag on the markets as it's the 2nd largest weighting in both the Nasdaq and S&P 500 which closed down 2.03% and 1.57%, respectively. There also was no rotation into small caps as the Russell 2000 closed down 2.01% in what was just a broad market sell-off today. The VIX closed up about 18% to finish at $20.82, and it's now in backwardation again with spot VIX closing above the front month contract, which historically has been cause for at least near term concern. Tomorrow we will be going into a 3 day weekend with markets being closed on Monday, February 16th, for President's day.
The Nasdaq did get a gap up this morning, back above yesterday's failed breakdown retest, but as I said in yesterday's update it was a really weak finish for markets and the gap up was not strong enough to negate yesterday's weakness as it quickly broke down through that retest support. It also broke through the new uptrend that it started yesterday and prior downtrend supports. Overall it was just an ugly day for the markets and now the Nasdaq starts a new range on the daily which is a large sideways trend.
The first big level to watch tomorrow will be from this new sideways trend that it started today (white) which will be at about 22,550 and is essentially where today's low was (22,548.02). If it fails to open above this level, then it becomes resistance on a retest and the next support to watch will be from its prior downtrend (purple) at about 22,420. After this, I would be watching weekly support around 22,235 (see last weekend's update). If we do get a big snap back rally tomorrow then the next resistance level to watch will be from the uptrend that it broke below today (yellow) which will be at about 23,110.
The S&P also broke down through yesterday's primary uptrend, and for now it still starts a new uptrend with a really wide range as volatility remains high. Support from this new uptrend (white) will be at about 6,830 tomorrow which is just below where it closed today (6,832.76). So if it fails to open above this level then it becomes resistance on a retest. The next supports to watch will be from its prior downtrends at 6,805 (purple) and 6,740 (yellow). On the weekly there will also be support at 6,720-6,725. Meanwhile in the snap back rally scenario, resistance will be far at about 6,975, just above today's high of 6,973.22.
Lastly, the Russell 2000 also broke down below its prior uptrend support, but still starts a new uptrend here as it had been making higher highs prior to today's sell-off. But it again was a weak finish, similar to yesterday, and there's risk of gapping below this new support. The key level to watch tomorrow will be at 2,613-2,614 from that new uptrend (white) which is closed just above today (2,615.83). If it gaps or breaks below that, then the next support to watch will be from its prior downtrend (purple) at 2,562. On a bounce, the first resistance will be from its prior uptrend (blue) at about 2,665 and then there would be more at 2,708 in the snap back rally scenario from its next uptrend resistance (yellow).
