The markets finished relatively flat yesterday with tech leading as it gained 0.35% while the S&P and Russell closed lower by 0.11% and 0.22%, respectively. The VIX also closed lower by 1.33% at $19.23. This was the lowest close for the VIX since February 26th. With volatility coming back down, the expected daily move is much smaller for the markets. For example with the VIX at $19.23 the expected daily move for the S&P is 1.20% vs nearly 2% a couple of weeks ago when the VIX was above $30.
With the smaller moves in the market we can also expect fewer trends to break and fewer new trends to develop. That's what we have in the case for Friday's action as none of the indexes started any new trends. For the Nasdaq, the first resistance level to watch on Monday will be from its prior uptrend (yellow) at 23,060 followed by its sideways range (purple) at 23,135. If it can break through these, its last resistance will be at 23,450 from its primary uptrend (white) in the event of a big rally.
If we get a pullback on Monday, the first support to watch will be at 22,825 from its prior uptrend (blue) and then if there is a big sell-off its primary uptrend (white) would come into play at 22,450.
The S&P got rejected at its first key resistance yesterday (purple) at about 6,846 so it remains valid for now. The first key level to watch on Monday will be from its prior uptrend (yellow) at 6,818-6,819 which it finished just below yesterday (6,816.89). If it opens below this 6,818-6,819 level on Monday then it will be resistance, and if it gaps above it, then it will act as support. The next resistance will then be at 6,885-6,887 from its next uptrend (purple) which it got rejected at yesterday. If it breaks through this, its primary uptrend (white) will be the last daily resistance to watch at 6,930-6,932.
If we get a pullback and gap or break below the first key level (yellow) at 6,818-6,819 then the next support will be at 6,720 from its primary uptrend (white). Its prior uptrend (purple) will be the next support just below that at 6,712-6,713. So this 6710-6,720 area would be big support from both of these trends.
The Russell 2000 also got rejected near its first resistance yesterday (purple) which also remains valid and will again be the first resistance to watch on Monday which will be at 2,658. If there's a big rally its last resistance will be at 2,705-2,710 from its primary uptrend (white).
On a pullback, the first support to watch will also be from its primary uptrend (white) at 2,610. If that doesn't hold then its prior uptrend (purple) comes into play again from the bottom of its range at 2,592. For now these are the only two trends to watch.
