This morning Fed Governor Christopher Waller said that he is leaning towards keeping interest rates unchanged for the upcoming September 16th rate decision as long as there are no surprises in next week's inflation data. This sent futures higher in pre market as odds of a rate hike came back down to about a 50-50 split for a 25bps hike and unchanged for the next decision. Yields also came back down on this with the 10 year treasury falling to about 4.77% after hitting the 2025 high above 4.8% yesterday. Despite the pullback in yields, small caps lagged with the Russell 2000 closing higher by just 0.51%. It was tech, and specifically the Mag 7, that led today with the Nasdaq jumping 1.4% while the MAGS ETF closed up 2.4% nearing its all time high. The S&P added 1.06% while the VIX got crushed again, falling 5.8% to close at $14.32. The VIX is now once again near the low of the year.
Tomorrow morning we will get the big August jobs report which is one of the notable economic data points that will effect the Fed's next rate decision. The July jobs report was abysmal which sent odds of future rate hikes lower. Tomorrow the expectation is for the economy to have added 55k jobs and for the unemployment rate to tick up to 4.2% from 4.1%. We will also be going into a 3 day holiday weekend tomorrow with the markets being closed on Monday, September 7th, for Labor Day.
The Nasdaq nearly reached its primary daily downtrend (white) today with the big rally, but it didn't break through it so it doesn't start any new daily trends for tomorrow. That primary downtrend will be the first resistance level to watch tomorrow at about 26,670. It closed at 26,584 today and it could potentially gap above it on the jobs data. If that happens, the 26,670 area would become support on a pullback. From there, the last daily resistance to watch will be from its prior uptrend (orange) around 26,885.
If markets pull back on the jobs data tomorrow, the first support to watch on the Nasdaq will be from its prior uptrend (orange) around 26,415. If that doesn't hold and we get a bigger sell-off, the next support will be from its primary downtrend (white) around 25,975. There would be more just below that from its prior downtrend (blue) at about 25,940 which would probably be the last support in play on a sell-off tomorrow.
The S&P broke just above its primary downtrend and failed to close above it, starting a new downtrend. While it was a failed breakout, it was still a strong finish as it held most of its gains and it could potentially gap over its new primary downtrend (white) which will be at about 7,753 tomorrow. There will also be more resistance at 7,749-7,750 from today's failed breakout (green). If it does gap above these two levels on the jobs data then they will act as support instead. From there, the only resistance to watch would be from its prior uptrend (orange) at 7,790-7,795.
If the S&P fails to open above 7,749-7,750 tomorrow then those first 2 trends (green and white) will both be resistances on a rally attempt. On a pullback, the next support would then be from its previous uptrend (orange) at about 7,675. If that doesn't hold, its green and white downtrends would be support from the bottom of those ranges at 7,595-7,600. Finally, its prior sideways range (purple) would likely be the last support that comes into play on a larger sell-off at about 7,588.
The Russell 2000 once again remained within its primary downtrend, so it doesn't start any new ranges for tomorrow. The first resistance will again be from its prior downtrend (blue) at 2,971-2,972. The Russell closed at 2,968 today, just below that level. If it were to gap up above it, then the 2,971-2,972 level would act as support. After that, its primary downtrend (white) would be the next resistance on a rally attempt at 2,990. If it breaks through it, the last daily resistance to watch will be from its prior uptrend (green) at 3,006-3,007.
On a sell-off, the first support to watch will be from its prior downtrend (blue) at 2,887-2,888. If that doesn't hold, the last support that potentially comes into play will be from its next downtrend (yellow) at 2,866-2,867.
