Volatility was in the air today as markets saw a steep sell off after opening relatively flat. The Nasdaq was down as much as 2.3% at the lows of day while the S&P was down as much as 1.5%. While small caps were relatively strong in the morning, they also ended up selling off as much as 1.4% but they did recover and the Russell 2000 was the only index to close positive with a tiny 0.05% gain. The S&P almost got there, but still closed down 0.13% while the Nasdaq closed down 0.53% led by losses from Microsoft which closed down about 10%. During the sell off the VIX jumped nearly 21%, but closed up just 3.24% after the big market reversal. Apple also just reported earnings after hours and is currently higher by about 1.5%.
The Nasdaq opened flat, below the 26,060 level that I mentioned in yesterday's update, which became resistance this morning. It also failed to break through it at the open, putting in a high of 26,046.34. It also broke through several supports, but there wasn't really any technical damage done with the rally back and it still starts a new uptrend here. But because of the size of today's move, the new range is very large and it's very far from both ends of the range. So the new support from the primary uptrend (white) will be at about 25,550. The next resistance to watch would be around 26,400 from the prior uptrend (yellow). Both of these levels are for tomorrow, but since they're so far from the current price they may not even come into play.
The S&P had a failed breakout yesterday and it opened flat, below the key level of 6,990 which I mentioned in yesterday's update. Since it failed to open above it, that level became resistance. I also mentioned that the new uptrend support would be back down around 6,900 if markets pulled back over the next few days. I was not expecting the failed breakout to lead to such a sharp one day sell off. Since it did happen so quickly, that support for today was lower around 6,880 which I posted on X/StockTwits this morning. But, it also broke through that 6,880 level and put in a low of 6,870.80. With the sharp rally back and close well above it, it now has a new failed breakdown on the daily which starts a new uptrend for it. Just like with the Nasdaq, due to today's volatility this new range is pretty large.
Its prior sideways trend (purple) that led to yesterday's failed breakout remains as valid resistance here since it did get rejected there this morning. That resistance will still be right around 6,990 for tomorrow. If it were to gap above 6,990 tomorrow then it would be support. After that, the next resistance level to watch will be at 7,025 from its new primary uptrend (white) that it started today. And there would also be more resistance just above that at about 7,030 from its prior uptrend (yellow) which was from yesterday's failed breakout. Meanwhile supports to watch would be at 6,895-6,900, also from the prior uptrend (yellow), and then more just below it at 6,880-6,885 from its new uptrend (white).
Yesterday I got long IWM again as I was beginning to see another rotation out of tech and into small caps, and today small caps did show relative strength even through the early morning sell off which I held through, and I'm holding them again as the Russell did put in a failed breakdown as well. Since it did make a lower low today, it does start a new downtrend with the failed breakdown. But, it was a really strong finish well off the lows and there is potential for a gap above this new downtrend tomorrow.
The resistance level to watch tomorrow will be at about 2,658 from the new primary downtrend (white) that it started with today's failed breakdown. The Russell 2000 closed at almost 2,655 today, so it needs a very small gap up to open above it the 2,658 level in which case it would become support. If it gaps/breaks above 2,658 then the next resistance to watch would be at 2,677 from its prior downtrend (purple). A gap above 2,677 would be especially bullish as that level would then become support and it would be very likely to start a new uptrend from there, but that would require a large gap up of almost 1%. Now if we do have another pullback tomorrow then the first support to watch will be at about 2,629 from the prior downtrend (purple) and retest of today's failed breakdown. If that doesn't hold then the next support would be just above 2,600 from its new downtrend (white).
