After hitting fresh all time highs this week, the Nasdaq and S&P finished essentially flat. The Nasdaq closed lower by 0.08% while the S&P finished higher by 0.13%. The Russell 2000 was the big loser as it lost 2.4% for the week and finished at its lows. With the sell-off into the end of week, the VIX finished the week higher by 7.2%. Metals were also losers this week as the Dollar jumped 1.5%. Gold finished the week lower by 3.8% while Silver closed down 5.6%. But that doesn't tell the whole story. Silver was up as much as 11.5% this week before the end of week sell off as it closed down 10.6% just today.
The big catalyst for next week is going to be Nvidia's earnings report which will come out on Wednesday, May 20th, after the market close. It will likely move the markets as it will be a reflection on other semiconductor and AI themed names which make up a big portion of markets now. Aside from their report, there will also be several Fed speakers throughout the week. Today was Jerome Powell's last day as Fed Chair and a new regime begins with Kevin Warsh taking over.
In last week's update I mentioned that the Russell 2000 had a failed weekly breakout which set it up for a pullback. I also noted that I would be looking to buy puts 2,890 which was a retest of that failed breakout. This was essentially the high of the week as it hit 2,888.21 before reversing. It also got down to my downside target of 2,795-2,800 which initially held early in the week, but it ended up breaking and closing just below it at 2,793 during today's sell-off.
Since the Russell 2000 did break through its primary weekly uptrend today, it starts a new primary trend (white) for next week which is sideways. The first level to watch however will be its prior uptrend (yellow) at 2,832-2,833. This is about 1.4% away from today's close. so it's unlikely that it gets a big enough gap up on Monday to open back over this. So it will most likely be resistance next week on a rally attempt. If it does gap or break above it, then the next resistance to watch will be from its new primary sideways range (white) at 2,888. And if it can break through this level then the last resistance likely to be in play will be from its next uptrend (purple) at 2,918.
Due to the weak finish at lows, and the unlikelihood of it gapping back over its prior uptrend (yellow) at 2,832-2,833, it is more likely that we see a continuation of this pullback. The next support level to watch for the Russell will be at 2,745-2,750 from its prior uptrend (purple). This is only about another 1.5% away from today's close. If that area doesn't hold, its last weekly support will be from the new primary range (white) at 2,720-2,725 which would be about 2.5% away.
The Nasdaq did not break through its primary uptrend this week, so it doesn't start any new weekly trends for next week. The first level to watch for next week will be at about 26,350 which is where its primary uptrend (white) will be at. The Nasdaq closed at 26,225 today - below that 26,350 level. So it will have to gap up about 0.5% on Monday in order to open above its primary uptrend. If not, that level will act as resistance on a rally attempt, and it fails to gap above it then it will start a new trend for the following week but we will have to wait and see how it finishes first. The next level to keep an eye on will be from its prior uptrend (yellow) at 26,300 which is also above today's closing price. This trend will also act as resistance if it fails to gap above it on Monday.
If the Nasdaq does gap above or break through the levels mentioned above, then the last weekly resistance likely to be in play for next week will be from its primary uptrend at 28,025-28,050. If it fails to get that gap up on Monday, and we get a continuation of today's pullback, then the only weekly support for now will be from the bottom of its next uptrend (yellow) at 24,550-24,575.
The S&P didn't break through its primary uptrend this week either, so it doesn't start any new trends going into next week. It is in a similar situation as the Nasdaq where it needs to gap up on Monday to open above its primary uptrend (white) support which will be at about 7,432-7,433. This is only about 0.35% away from today's close of 7,408.50, so it is doable. But, if it fails to gap up, then that level will be resistance on a rally attempt. The next level to watch will be from its prior uptrend (blue) at about 7,463 which will also be resistance unless it can gap over it. If it does gap or break above these levels, then the last resistance will be from its primary uptrend (white) at 7,785-7,790.
If the S&P fails to get that gap up on Monday, then the next support to watch on a continued pullback will be at the bottom of its prior uptrend (blue) at about 7,100-7,105. That would likely be the only support in play for next week and it's about 4% away which is pretty far and may not even get tested even if we do see a continued pullback. It would be more likely that we simply start a new weekly trend, but we'll have to see how it finishes the week to determine the direction of it.
