The markets were weak again today with semiconductor and AI stocks selling off sharply. The SOXX etf fell 5% while SMH also lost 4% which led to the Nasdaq falling 1.33% on the day. However the selling was broad as small caps also fell 1.3%. Yields contributed to this as the 10 year treasury yield touched 4.75% this morning, breaking through the July highs, before pulling back to finish pretty flat. The S&P was the best performing index, but still posted a loss of 0.69%. The VIX did jump back above $16 briefly before settling at $15.84 which was only a gain of 4.28% for the day. It was relatively muted given the sell-off in markets.

In recent updates over the past week or so I have been talking about the increased risk of a pullback which we're now getting in markets. Similar to yesterday it was a very weak finish again near the lows of day for the indexes. The Nasdaq had a big gap down this morning below its primary daily uptrend supports and it never retested them as the bounce attempts were minimal and were sold into. With the close below its prior uptrends, the Nasdaq still does start a new daily uptrend for tomorrow as it did make higher highs last week.

For tomorrow the new primary uptrend (white) for the Nasdaq will essentially be right around where it closed today at about 26,290. So tomorrow's open will be very important. If the Nasdaq can open higher, this 26,290 area will act as support on a pullback and if it opens below it, it will act as resistance on a rally attempt. Now if the Nasdaq opens pretty flat and right around this 26,290 area then it's likely that it will break through it regardless of whether it opens above it or below it. But, in this scenario the open would still be important because an open above it would increase the odds of it closing back over it for a failed breakdown and vice versa if it opens below it. So for now we'll just have to wait and see how it opens as this is the only daily support to watch. If we get a snap back rally tomorrow in the Nasdaq, its prior uptrends (yellow and purple) would likely be the only 2 resistance levels in play at about 26,715 (yellow) and 26,740 (purple).

The S&P also gapped below its previous primary downtrend and closed below it to start another downtrend. For tomorrow its new primary downtrend (white) will be all the way down to 7,635 which is well below today's close of about 7,692. This means that it's very likely we'll get an open above its primary downtrend and it will act as support rather than resistance which is a good sign for the bulls. Its prior downtrend (orange) will also potentially be support tomorrow as it will be support/resistance at about 7,685 which is also below today's close. So as long as the S&P doesn't gap below that, it will act as support on a pullback. If it does gap or break below it, its previous uptrend (yellow) would be the next support to watch around 7,655-7,660. Finally its last daily support, assuming there's no big gap below it, would be its primary downtrend (white) at 7,635.

If we do get a higher open tomorrow and a rally back, the first resistance to watch will be at about 7,735 from its prior downtrend (blue). The last resistance potentially in play will be from its next downtrend (orange - top of the range) at about 7,750. Assuming it doesn't get a big gap below its primary downtrend tomorrow, it will start a new trend which for now will still be lower as it has been making lower highs/lows over the past couple of sessions.

The Russell 2000 remained in its primary uptrend again today so it doesn't start any new ranges for tomorrow. Its primary uptrend (white) will be the first support to watch at 3,004-3,005. If it doesn't hold, the last support likely in play will be from its prior downtrend (blue) at 2,975-2,980.

On a bounce back the only resistance that would potentially come into play would be from its prior uptrend (purple) around 3,085. However this is pretty far and is unlikely to actually to be tested. It's much more likely that it either remains range bound in the current primary uptrend or it breaks below it to start a new trend. But as long as there's no big gap down below the 3,004-3,005 (primary uptrend) area then the odds of a close above it increase even if it breaks below it.