Futures opened lower last night to start the week but by they had reversed by the market open and we actually saw a gap up this morning. The Nasdaq and S&P were up nearly 1% at the highs this morning while the Russell 2000 was up 0.7%. It was looking like we were setting up for a relief rally after the last few weeks of selling. However, the rally quickly faded and markets closed lower again which was led by small caps as the Russell 2000 closed down 1.46%. The Nasdaq closed down 0.73% while the S&P finished down 0.39%. There was a bit of a recovery into the close, but it was still a big reversal from the opening highs. Even with the sell-off the VIX was weak and it also closed lower by 1.4%. Even at its highs of day it wasn't up much, only about 1.5%.
The Nasdaq didn't break through its primary daily downtrend at 20,630 that I mentioned in the previous update, so it doesn't start any new trends for tomorrow. The next daily support to watch is from this same primary downtrend (white) which will now be at about 20,365. That's the only support level to watch for now. If we get a bounce, the first resistance to watch will be from its prior downtrend (yellow) at 20,765 followed by its primary downtrend (white) again right around 21,000. If it can break through this primary downtrend, then it will start a new trend but we'll first have to see how it closes. There will be other resistances above it as well from its prior downtrend (blue) at 21,185 and then its next downtrend (yellow) comes into play again from the top of that range at about 21,500.
The S&P broke through its primary weekly support today (see the weekly update) at 6,335 before it rallied back to close above it, but we'll have to see how this week finishes to see if it's a failed breakdown or not. It didn't break through its daily supports however, so it also doesn't start any new daily trends going into tomorrow. The first support to watch for tomorrow will be at 6,265 from its prior downtrend (purple) which it bounced off of today. After that, its primary downtrend (white) would be the next support at 6,235. If that does not hold then its next support would be from its prior downtrend (yellow) at 6,205. On a rally attempt the first resistance level to watch will be from its primary downtrend (white) at 6,390. If it breaks through, then the next resistance level would be from its prior downtrend (blue) at 6,445.
The Russell 2000 broke and closed below its last downtrend support which starts a new downtrend for it going into tomorrow. Its new primary downtrend (white) will be support at 2,372 tomorrow and its prior downtrend (purple) would be support just below that at 2,368. On a bounce, the first resistance to watch will be from its previous downtrend (blue) at 2,416 and then its primary downtrend comes into play again at 2,433. In the event of a big rally back, the next level to watch would be at 2,495 from the top of its blue downtrend.
