After small caps hit new all time highs this morning, they reversed to lead the way lower as the Russell 2000 closed down 0.6%. The rise in yields today helped spark the sell-off as the 10-year climbed back over 4.4%. The S&P finished down 0.41% while the Nasdaq was the best performing but also lost 0.19%. The markets did recover off of their lows in the afternoon, but the VIX still closed up 7.65% at $18.29 - however, this was also off its high of $19.08.
The Nasdaq opened below its primary daily uptrend support this morning and closed below it, which starts a new trend for it. As I mentioned in my prior update over the weekend, this would be the most likely scenario as it wouldn't get enough of a gap up to open above its prior uptrend support. Its new primary uptrend (white) is still a new uptrend for now, but it's in the same boat as Friday as it likely will not open above this new uptrend tomorrow which will be at about 25,210. That level is about 0.6% away from today's close of 25,067, so the more likely scenario is that the 25,210 area will be resistance on a rally attempt.
On a pullback, the first support to watch will be at about 24,975 from its prior uptrend (orange) followed by its next uptrend (yellow) at 24,950. After that, its prior downtrend (blue) will be support at about 24,815 and its next uptrend (purple) would be next at about 24,740-24,750.
In my last update I noted that the S&P had a failed daily breakout and that we would likely see a pullback today which played out almost perfectly. It did not break through its primary uptrend support at 7,168 today as it put in a low of 7,174, so it doesn't start any new trends going into tomorrow. For tomorrow this primary uptrend (white) will be the first support to watch again which will be at 7,189-7,190 assuming no gap below it (the S&P finished above it at 7,200.75 today). If it does gap or break below it, then the next support will be from its prior uptrend (yellow) at 7,168-7,170.
If the rally resumes tomorrow, the next resistance to watch will be from its prior uptrend (yellow) at 7,275. If it can break through that, then its primary uptrend (white) would be the last daily resistance at 7,315.
The Russell 2000 also didn't break through its primary uptrend support at 2,782-2,783 that I mentioned in my weekend update. It bounced right off of it, putting in a low of 2,782.49, so it doesn't start any new trends for tomorrow. That primary uptrend (white) will be the first level to watch tomorrow which will be right around 2,800. Since the Russell closed at about 2,796 today, it will need to gap up a little in order for its primary uptrend to act as support. If it can get that gap above 2,800 then the only resistance level to watch will be from the upper end of this primary uptrend at about 2,885.
If the Russell fails to gap back over the 2,800 level, then that level will act as resistance on a rally attempt and the next support to watch on a pullback will be from its prior downtrend (purple) at about 2,760.
