The CPI report this morning did not provide any surprises this morning with month-over-month CPI rising 0.1% while core rose 0.2%, both in-line with expectations. Since it didn't come in hot, the markets did rally on it as it doesn't increase odds of a rate hike. The rate sensitive Russell 2000 was the leader today because of this, gaining 0.61% for the day. Markets also rallied on the back of some semi/AI themed earnings from CRWV and LITE which jumped over 19% and 13%, respectively. This boosted the entire semiconductor sector and the Nasdaq gained 0.54%. The S&P also closed up 0.26% while the VIX fell nearly 5% to settle at $14.55. The VIX did fall to a low of $14.39 today, breaking below the prior 2026 low of $14.43 from January.
While markets did get a rally and close higher today, it wasn't actually a strong finish. The Nasdaq did gap above the first key level I talked about in yesterday's update from its prior uptrend (purple) around 26,535. Since it got the gap up above it, that area acted as support on the early pullback in the morning as it put in a low of 26,531.93. However, it wasn't a strong finish and that prior uptrend will continue to be resistance tomorrow unless it can gap above it again. For tomorrow that prior uptrend (purple) will be around 26,730 which is about 0.50% away from today's close of 26,588. If it can get the gap above it again, or if it can rally to break through it, the last two resistances to watch would be from its primary uptrend (white) and next uptrend (yellow) at 27,075-27,100.
If the Nasdaq fails to get the gap above its first key resistance (purple) at that 26,730 area, then it will act as resistance on a rally attempt. On a pullback, the first support to watch will be right around 26,500 from its first uptrend (yellow) followed by its primary uptrend (white) around 26,485. If it breaks through its primary uptrend or potentially even gaps below it, then it will start a new trend but we'll first need to see how it closes tomorrow.
The S&P did break below its previous primary uptrend support at the 7,743-7,744 area this morning, but it did rally back to close just above it at 7,748.50 which starts a new uptrend for it. However, like with the Nasdaq it was not a strong finish and it will need to gap up tomorrow to open above its new primary uptrend (white) which will be at about 7,782. That is about 0.40% away, and if it does get that gap up there would be more resistance from its prior uptrend (blue) at about 7,788. These will be the only two resistance levels in play for tomorrow assuming there is no gap above them. If it can get that gap up above them, then they will become support.
It's more likely that we don't get that gap up tomorrow, or simply break down through the primary uptrend again to start a new trend. On a pullback, the first support to watch would be at about 7,650 from its prior sideways range (yellow). If there's a larger sell-off then the last daily support in play would be at 7,585-7,587 from its next sideways range (purple).
The Russell 2000 got rejected right around its first resistance (yellow) that I talked about in yesterday's update around the 3,050 level. It hasn't invalidated that prior uptrend yet so it will be the first resistance level to watch again for tomorrow which will be a bit higher around 3,053-3,055. If it breaks through it, the next resistance in play would be from its next uptrend (purple) around 3,073 and the last resistance potentially in play would be from its primary uptrend (white) around 3,083.
If we get a pullback tomorrow, the only daily support level to watch will be from its primary uptrend (white) and its prior downtrend (orange) at 2,980-2,985 where the two trends intersect. This area will be about 2% away and a big support level to watch in case of a larger sell-off.
