After yesterday's sell-off on the Fed, the markets gapped up and melted higher all day. The Nasdaq led the way, closing up 2.78% after a big bounce in a lot of the semiconductor and AI related names. SOXX jumped 8.5% while SMH added nearly 7%. Today's move in a lot of these semi and AI related names felt like a short covering rally with huge moves of 20-30% or more in some cases. There was news that Leopold Aschenbrenner's Situational Awareness fund blew up after taking heavy losses in many AI related names and that the liquidation of those stocks helped lead to the big sell-off that we've seen over the past month. Furthermore, it came out that Citadel purchased his portfolio after the liquidation. This has led to speculation of a planned short attack by Citadel and other funds against Leopold's Situational Awareness, and that today's rally may have been fueled by short covering of those AI names from those funds. After the close Amazon and Apple also reported earnings with both beating estimates. Amazon is currently trading higher by about 8%, however Apple is lower by nearly 5%. While tech was the biggest beneficiary of today's rally, the S&P and Russell 2000 also gained 1.66% and 1.37%, respectively. The VIX also got crushed on today's move, settling down 17.28% at $17.09.
With today's big rally the Nasdaq did break and close above yesterday's primary daily downtrend. It also made a higher low and higher high which now starts a new primary uptrend (white) for it. Its primary uptrend will be around 25,215 tomorrow which is above today's close of 25,122. So it will need to gap up again tomorrow to open above this new primary uptrend. If it can, the only resistance to watch will be from the top of this primary uptrend at 25,825-25,850.
If the Nasdaq fails to get the gap above the 25,215 area and its new primary uptrend, then that level will act as resistance on a rally attempt. On a pullback, the first support to watch will then be from its prior downtrend (yellow) at about 24,850. If that doesn't hold, the last support likely in play would be from its next downtrend (purple) at 24,475-24,500.
The S&P gapped back above its prior uptrend support (blue) this morning which became support rather than resistance. It didn't break through its primary range so it doesn't start any new daily ranges for tomorrow. The only resistance to watch on a continuation of the rally will be from its primary range (white) at 7,580-7,585 tomorrow. On a pullback, its prior uptrend (blue) will again be the first support to watch at 7,380-7,385. If that doesn't hold, the last support likely in play for tomorrow would be from its primary range (white) at 7,260-7,265.
The Russell 2000 also broke and closed above yesterday's primary downtrend, but unlike the Nasdaq it didn't make a higher high, so it still starts a new daily downtrend for now. The first resistance to watch tomorrow will be at 2,948-2,949 from its prior downtrend (blue) with its primary downtrend (white) being resistance just above that at 2,952. If it breaks through, the last resistance to watch will be from its next downtrend (orange) at 2,957-2,958.
On a pullback, the first support to watch will be from its first downtrend (green) which it closed above today. That will be support at about 2,935 on a retest of today's breakout. If it doesn't hold, the next support is farther away from its next downtrend (orange) at about 2,902. The last two supports to watch would be from its prior downtrend (blue) and primary downtrend (white) at 2,893-2,894.
