This morning's January jobs report was a welcomed surprise for bulls as there were 130,000 jobs added, well above the estimated 67,000. The unemployment rate also fell from 4.4% to 4.3%. Futures spiked on the data this morning and markets opened higher but the rally quickly faded and the market selloff was led by small caps with the Russell 2000 closing down 0.38%, even though odds for rate cuts increased after the strong jobs report. Tech was also lower with the Nasdaq closing down 0.16% while the S&P was unchanged.
All of the indexes broke through their primary uptrend supports today on daily time frames, but they all also rallied back to close above them and put in failed breakdowns. However it wasn't a strong finish. Looking at the Nasdaq for tomorrow, the first key level to watch will be at 23,090 which will be the retest of today's failed breakdown (blue). It closed at 23,066, so it will need to gap up a little tomorrow in order for this retest to be support. If it fails to gap above it, then it will be resistance. After that, the next support would be from the new uptrend it started today (white) which will be right around 23,000. If that does not hold, then its next support will be from the prior downtrend (yellow) at 22,640. Resistance to watch remains the same from its prior sideways trend (purple) which is just under 23,400 again.
Similarly, the S&P put in a failed breakdown but it wasn't a strong finish and tomorrow it will need to gap above 6,964 to hold the retest of today's failed breakdown (blue). This would require a larger gap up of about 0.3% as it finished at 6,941 today. If it fails to get that gap up, then the 6,964 level becomes resistance on a rally attempt. The next support to watch would be from its new uptrend that it started today (white) and that will be at about 6,944 - which it also closed below today. So if it fails to open above this level, then that will also be resistance. If we do get a breakdown tomorrow then the next supports to watch would be around 6,830 from its prior downtrends (purple) followed by 6,780 (yellow). Meanwhile, daily resistance is pretty far and unlikely to come into play, but the next big resistance level I'm watching is still on the weekly time frame at 7,060-7,065.
The Russell 2000 closed just a hair above daily support which was at about 2,669, and it closed at 2,669.46. It still does put in that failed breakdown to start a new uptrend, but it was also a very weak finish and will also need to gap up tomorrow to open above that retest support (blue). That retest level will be at about 2,688 which is about 0.7% away so we'd need to see a significant gap higher tomorrow for small caps to hold it, which is unlikely. It's more likely that the 2,688 level will be resistance on a retest and the next support to watch will be at about 2,654 from the new uptrend that it started today (white).
