The markets finished strong again this week with tech leading as the Nasdaq closed up 4.7% for the week. Small caps also posted a strong weekly gain with the Russell 2000 closing up about 4% while the S&P added 3.6%. These were strong back-to-back weekly gains for the markets as they are well off of their lows. The VIX also got crushed as it lost 19.4% for the week. Earnings season will kick off next week with big banks beginning to report. J.P. Morgan, Goldman Sachs, Citigroup, Bank of America, and Wells Fargo will all report next week. Aside from the Iran war, these earnings will be the biggest catalyst for the markets and especially financials.
With the strong finish this week in markets, the indexes closed above their prior weekly downtrends and now start new uptrends which they haven't been in much of this year. There will also be fewer weekly levels to watch now as most of the prior downtrends have been invalidated. For the Nasdaq, the key levels to watch will be from its new primary uptrend (white). Support from this trend on a pullback will be at about 22,550-22,575 while resistance will be at 23,925-23,950 from it if we get a continuation of the rally.
For the S&P, it also started a new weekly uptrend however its prior trends are still in play. The first key level to watch for next week will be at 6,808-6,810 which will be support/resistance from both its prior uptrend (purple) and prior downtrend (yellow). The S&P closed this week at 6,816.89 so it's very close to this 6,808-6,810 area and if it gaps below it on Monday then those levels would become resistance. If it does open above them, then they'll act as support on a pullback. After that, the next support to watch will be from its primary uptrend (white) at 6,755-6,760. Meanwhile if we get a continuation of this rally the next resistance will also be from its primary uptrend at 7,060-7,070 which would be new all time highs for it.
For the Russell 2000, its new primary uptrend (white) will be the first support to watch and that will be at 2,629-2,630 which is essentially where it finished this week off at (2,630.58). So there is potential for a gap below it on Monday in which case the 2,629-2,630 area would become resistance. If it does open below it, then the next support to watch will be from its prior downtrend (purple) at 2,523. If we get a gap up on Monday above the 2,630 level then that will continue to act as support and the next resistance will be from its primary uptrend at 2,760.
