After a strong rally the last couple of days, the markets pulled back a bit today which was led by tech as the Nasdaq closed down 0.59% while the Russell 2000 and S&P lost 0.34% and 0.33%, respectively. Markets are awaiting the January employment situation which got delayed last week due to the partial government shutdown. This report will be out tomorrow morning at 8:30 AM EST and will include the month over month nonfarm payrolls number in which 67,000 jobs are expected to be added while the unemployment rate is expected to remain unchanged at 4.4%.
Because of this jobs data tomorrow, we could see a significant gap either way in markets. It was a weak finish today, not because it was a big decline, but more so because markets closed at the lows of day. The Nasdaq did gap up this morning to open above its primary downtrend resistance at 23,090 which was the big level I said to watch in yesterday's update. It also sold off into the close right down to this support as it hit a low of 23,089.10 and closed just above it at 23,102.47. Since it did close above it, even though it was a weak finish, it still starts a new uptrend going into tomorrow.
The first support level to watch on a pullback tomorrow will be at about 22,965 from its new uptrend (white). If that breaks, then the next support will be at about 22,865 from its prior downtrend (blue) that it closed above today. Resistances to watch will be at about 23,390 from its prior sideways range (purple) and then its new uptrend (white) will be resistance at about 23,565. It also has weekly downtrend resistance at about 23,535.
The S&P did not break through any of its ranges from yesterday so it doesn't start any new trends going into tomorrow. It remains in its primary uptrend (white) for now and that will be support around 6,927 tomorrow on a pullback. If that doesn't hold then the next supports to watch would be at 6,853 (purple) and 6,820 (yellow) from its prior downtrends. Its current primary uptrend will be resistance at about 7,055 if we get a big rally going, and weekly resistance is just above that level at 7,060-7,065.
The Russell 2000 failed to gap up above the 2,696 level this morning which was the key level I mentioned in yesterday's update that it needed to gap above to remain in its primary uptrend. It did break back above it during the day, but also failed to close above it which starts a new trend now. Since it has been making higher highs, this new trend that it starts is still higher.
Support from this new uptrend (white) will be at about 2,670 tomorrow. It closed at 2,679 so there is potential for a gap below that if there's a negative reaction to tomorrow morning's jobs data. If it gaps or breaks below that level, then the next support would be further away at about 2,608 from its prior downtrend (yellow). The next resistance to watch on a rally would be at about 2,735 from its new uptrend that it started today. If it breaks through that then there would be more just above it at about 2,738 from its prior uptrend (blue) that it closed below today.
