The markets finished relatively flat again today after a much calmer session yesterday as well as volatility has come off its highs. The S&P finished down 0.08% while the Nasdaq closed up 0.08% and the Russell lagged again with a loss of 0.2%. The VIX closed down 2.8% at $24.23. While it is still elevated, it's well off Monday's high which was just above $35. With the VIX at $24, the implied daily move for the S&P is 1.5% which is still very large. Tomorrow morning we will get jobless claims data which probably won't be a big market mover. But on Friday we'll get the next batch of inflation data with PCE - the Fed's preferred inflation gauge.
Yesterday the Nasdaq had a failed breakout on the daily and it initially got rejected on the retest this morning before breaking through it, but it didn't break through its new uptrend resistance. So new trends are started going into tomorrow. The same trends from yesterday remain valid and the first resistance levels to watch tomorrow will be at 22,795-22,805 from both of its prior downtrends (purple and yellow). After that its primary uptrend (white) would be resistance at about 22,925-22,930. If there is a big sell-off again then the next support to watch will also be from this uptrend which is just under 22,100.
The S&P opened below its previous uptrend which I mentioned in yesterday's update that it was likely to do so as it would have required a pretty big gap up in order to stay in it. We didn't get that gap up and it also didn't gap above its prior downtrend (purple) which acted as resistance on the early rally attempt this morning. With the close below the prior uptrend, it still starts a new one, and that new uptrend (white) will be the first support to watch tomorrow which will be at about 6,740. I would consider getting long if it tests this support tomorrow on another pullback. If it breaks through it or even potentially gaps below it (if it gaps below it I won't be interested in a long there), then the next support would be from its prior downtrend (purple) at about 6,650. On a bounce, this same downtrend will be resistance at about 6,793.
The Russell 2000 also closed below its uptrend support from yesterday and starts a new uptrend today, but similar to yesterday it will need to gap up tomorrow to stay in it. This time though, it doesn't need as much of a gap up as that new support (white) will be at about 2,558 which is about 0.6% away from today's close of 2,542. It's still a sizeable gap up, but it's doable. However, if it fails to gap up above it then that 2,558 level would be resistance on a rally attempt. For now this is really the only key level to watch as its other trends are pretty far away and we'll need to see how it closes tomorrow to get the next trend going into Friday.
