The markets gapped up sharply this morning and snapped their losing streak with tech leading the way as the Nasdaq posted a daily gain of 1.69%. The S&P added 1.14% while the Russell 2000 lagged, but still posted a gain of 0.55%. This rally comes a day after the Fed hiked interest rates by 25bps, which was the first hike since 2023. With the big rally today, volatility got crushed again as the VIX closed down nearly 13% at $15.44. Oil and yields both pulled back about 1% with the 10 year closing back below 5%.
In yesterday's update I noted that the Nasdaq had a strong failed breakdown which set it up for a rally back to the top of its new primary downtrend as long as markets didn't gap below support. Unfortunately, they gapped up big and most of the move occurred overnight. The Nasdaq did get right up to its primary downtrend resistance into the close, but it didn't break through it, so it doesn't start any new daily ranges for tomorrow.
The first resistance to watch tomorrow will still be from the primary downtrend (white) at 26,450-26,460 which is just above today's close of 26,418. There is potential for a gap above it, in which case that 26,450-26,460 area would become support. After that, the last daily resistance to watch will be from its prior downtrend (orange) right around 26,600. On a pullback, the only support that likely comes into play will be from this same downtrend (orange - bottom of the range) at about 25,920.
The S&P gapped above its primary downtrend that it started yesterday, so that level around 7,608 became support rather than resistance. It did have an early fade down near that support, hitting a low of 7,611.81 in the morning, but it didn't break through and it closed above it to start a new primary uptrend.
The new primary uptrend (white) for the S&P will be at about 7,720 tomorrow which is well above today's close of 7,637.76. So it is very likely that we open below this uptrend tomorrow. It's not necessarily bearish, but it will likely be resistance rather than support. It will also have several other resistances from its prior trends at 7,705 (orange), 7,710 (yellow), and 7,720 again (blue). So between 7,705-7,720 there will be 4 trends that will act as resistance including its new primary uptrend assuming there is no gap above these levels tomorrow.
On a pullback, the first support to watch will be at about 7,590 from both its prior downtrend (green) and its prior sideways range (purple) where the 2 trends intersect. If that doesn't hold, the next support would be at 7,565-7,570 from its next downtrend (blue) and the last support to watch will be around 7,550 from the next downtrend (orange).
The Russell 2000 had a really weak finish at the lows of day. It did gap up above its first resistance around 2,883 this morning and held it on the initial test, but it sold off into the close and broke and closed back below that 2,883 level from its prior downtrend (yellow). However, this wasn't its primary range, so it doesn't start any new daily ranges for tomorrow.
This prior downtrend (yellow) hasn't been invalidated yet so it will again be the first key level to watch at about 2,882 tomorrow. If the Russell gaps back over it again, it will act as support and the last daily resistance to watch will be from its primary downtrend (white) at about 2,943.
If the Russell fails to gap back over that first downtrend (yellow) at 2,882, then it will act as resistance. On another pullback, the next support will then be from its next downtrend (purple) at about 2,833 which will likely be the only support potentially in play for tomorrow.
