The markets had a strong rally today as rates and oil pulled. The 10 year yield fell 1.6% back under 4.6% while oil lost nearly 5% to settle back under $100. Both of these helped the broad market rally today, especially small caps as they led with the Russell 2000 closing up 2.56%. Tech was also strong into Nvidia's report as the Nasdaq gained 1.54% while the S&P added 1.08%. Nvidia did report record earnings after the close, beating on both the top and bottom lines and also guiding up for Q2. However, the stock is pretty flat after hours on the blowout quarter.
In yesterday's update I noted that the Nasdaq had another opportunity to break out of its daily downtrend with a gap above the 25,900-25,915 level. It did get this gap up in the morning as it opened at 25,991 and it quickly retested and held the breakout as it put in a low of 25,928.33 before rallying to new highs. Since it did break and close above yesterday's downtrend, it starts a new trend here which is slightly down but essentially a new sideways trend.
On a continuation of the rally tomorrow, the first resistance to watch will be at 26,515-26,525 from its prior uptrend (purple) with more just above that at 26,550-26,560 from its next uptrend (yellow). If it breaks through these, its last daily resistance will be from its new sideways trend (white) at about 26,670.
If we get another pullback, the first support to watch will be from yesterday's downtrend (blue) that it broke above today. That level will be at 25,710-25,720. If that doesn't hold, its last daily support will be from its new primary range (white) at about 25,685.
The S&P also gapped over yesterday's primary downtrend, retested it and finished strong at the highs of day. It does still start a new downtrend for tomorrow, but its new primary downtrend (white) will be at about 7,415 tomorrow which is below today's close of 7,432.97. So odds are it opens above this new downtrend tomorrow in which case the 7,415 area would be support on a pullback. And on a continuation of the rally, the next resistance to watch will be at 7,460 (purple) followed by 7,485 (yellow) and finally 7,510-7,515 (blue).
If the S&P fails to gap above the 7,415 level, or breaks through it on a retest, then the next support to watch on a pullback will be from its prior uptrend (purple) at 7,350-7,355. If that doesn't hold then its downtrend (teal) that it closed above today would be the next support at 7,315-7,320 and the last daily support likely to be in play tomorrow would be its new primary downtrend (white) at about 7,295.
The Russell also gapped and closed well above yesterday's primary downtrend, but it still starts a new downtrend. But similar to the S&P, it will likely open above its new primary downtrend (white) tomorrow due to the strong finish today. That new primary downtrend will be at about 2,802 tomorrow, which is below today's close of 2,817. So as long as it doesn't gap back down below 2,802, that level will act as support on a pullback. For now, there is no resistance overhead so we'll need to see how it closes tomorrow for the next trend to develop.
If the Russell fails to open above 2,802 tomorrow and gaps back under it, then that will be resistance. From there, on a larger pullback, the next support to watch will be at 2,700 from its prior downtrend (yellow) that it closed above today. If that doesn't hold, its new primary downtrend (white) will be support at 2,691-2,691 and finally its prior downtrend (purple) will be the last support at about 2,686.
