Today was the big interest rate decision by the Fed, and they raised rates by 25bps in a unanimous 12-0 vote. They also signaled for an additional hike by the end of the year. While this was what markets were anticipating, yields rallied on the hike with the 10 year moving back above 5%. Markets also sold off on the hike and Warsh's presser, but they did recover into the close. The Nasdaq held up the best and finished the day flat while the S&P and Russell 2000 fell 0.45% and 0.40%, respectively. The VIX closed up about 3% at $17.71 which was well off of the highs of day as it nearly hit $19.
The rally back into the close was actually quite constructive and the Nasdaq put in a big failed breakdown on a daily time frame. It broke below its previous primary downtrend and rallied back to close above it, but it did make a lower low so it still starts a new downtrend. However, there is room to rally here depending on how markets open tomorrow.
So for tomorrow, the first key level to watch on the Nasdaq will be at about 25,925 from today's failed breakdown (orange). That is below today's close of 25,978. As long as it doesn't gap below the 25,925 area it will act as support and it would be a good long setup with the next resistance around 26,425-26,450 over the next couple of days from its new primary downtrend (white).
If the Nasdaq fails to open above the 25,925 area and the retest of today's failed breakdown (orange), then the bullish scenario is no longer valid and that level becomes resistance. From there, the next support will be at its new primary downtrend (white) at 25,780-25,790. If that doesn't hold, the last daily support in play for tomorrow would be from its prior downtrend (blue) around 25,650. So tomorrow's open is very important.
The S&P did break and close below its previous primary downtrend support, starting a new primary downtrend for tomorrow. Unlike the Nasdaq, it did not rally back to reclaim the support into the close. But, tomorrow's open will still be important as it can potentially gap back over prior supports.
So the first level to watch for tomorrow will be from its prior downtrend (green) which it closed below today. That will be at 7,554-7,555 which is just above today's close of 7,551.81. If the S&P can gap back over it, that level will act as support. After that, its next downtrend (teal) will be resistance at about 7,570. If it potentially gaps back over that level as well, it would also act as support. Then comes its previous sideways channel (purple) at about 7,590. Finally, the last daily resistance to watch for tomorrow will be from its new primary downtrend (white) at about 7,608.
If the S&P fails to open back over the first key level at 7,554-7,555 (green) then this area will act as resistance with every other level mentioned above that being resistance as well. From there on a continued pullback, the only daily support to watch for tomorrow will be from its new primary downtrend (white) at 7,489-7,490.
The Russell 2000 continues to trade within its big primary daily downtrend so it doesn't start any new trends again. The first resistance to watch on a bounce back tomorrow will be from its prior downtrend (yellow) at about 2,883. If it breaks through it, the only other resistance that likely comes into play tomorrow will be from its primary downtrend (white) at 2,949-2,950.
On a continuation of the sell-off, the first support to watch will be from its prior downtrend (purple) at about 2,837. It did break through this trend today, but has yet to invalidate it. After that, the next support will be from this same trend (bottom of the range) at about 2,782. If it doesn't hold, the last daily support would be from its primary downtrend (white) at 2,766-2,767.
