The S&P was essentially flat today, finishing down 0.10%, while the Russell 2000 gained 0.37%. Tech lagged again with the Nasdaq closing down 0.43% after being down nearly 1% on continued semiconductor weakness. However, Micron (MU) reported earnings after the close which blew past estimates and they had a significant guide up above estimates as well. This is sending Micron higher by about 12% right now which is also carrying the rest of semis and the Nasdaq higher. Currently in after hours QQQ is up nearly 2%. The VIX had rallied back above $20 during today's market pullback, but settled down 4.4% at $18.63 after the Micron report. Tomorrow morning we will be getting the PCE report which is the next round of big inflation data.
Looking at the technical setup now, the Nasdaq did break and close below its prior primary uptrend support today. This now starts a new daily downtrend for it. However, with the current after hours action it could gap back over the support it closed below today. That previous uptrend (blue) will be the first level to watch tomorrow at about 25,720 which is about 1% away from today's close of 25,476. If it gaps back over that 25,720 level then it will become support on a retest. From there, the next resistance to watch will be at about 26,075 from its prior uptrend (yellow) and the last resistance to watch will be from its new primary downtrend (white) at about 26,330.
If the Nasdaq fails to gap back over its prior uptrend (blue) around 25,720 then it will remain as resistance on a rally attempt. And on a continuation of this pullback the next support to watch will be from its prior sideways range (purple - top and bottom of the range) at about 25,250 and then 24,865 (bottom end). If neither of those hold, the last daily support would be from its new primary downtrend (white - bottom end) at about 24,425. However, this is about 4% away and given the current action in after hours it is very unlikely this scenario occurs.
The S&P bounced off its first daily support that I said to watch out for in yesterday's update at 7,335-7,340. It got down to 7,336.82 into the close before recovering. It didn't break through any trends today so nothing changes for tomorrow.
The previous uptrend (blue) will again be the first level to watch at about 7,345. It closed at 7,358 today and assuming it opens above it tomorrow given the current after hours action, the 7,345 area will act as support on a pullback. From there, the next resistance to watch on a rally will be from its prior uptrend (orange) at 7,470-7,475. If it can break through this, the last resistance potentially in play will be from its primary downtrend (white) at 7,490-7,495.
If the S&P breaks through the first support at 7,345 (blue) or potentially even gaps below it, then the next support to watch on a continued sell-off would be at about 7,160 from its prior downtrend (yellow). After that would be more support at 7,145-7,150 from both its prior sideways range (purple) and its primary downtrend (white) where the two intersect.
The Russell 2000 was the leader again today and it bounced right off its primary uptrend support at 2,969-2,970 which was the key area I mentioned in yesterday's update. It hit a low of 2,969.72 in the morning before resuming its rally. Since it didn't break through it, it doesn't start any new trends for tomorrow.
Even though it was the best performing today, it wasn't a particularly strong finish. The Russell will need to at least open up a little tomorrow to open above its primary uptrend (white) again which will be at 2,986-2,987 tomorrow. The Russell closed at 2,986.62 today so it's right at it, but ideally it needs to open above it a bit or the risk of a breakdown below that support becomes greater. So, if it can get a bit of a gap up tomorrow then its primary uptrend will continue to act as support and the only resistance to watch will also be from this same uptrend (top of the range) at 3,115-3,120. However this is over 4% away and is unlikely that it's actually tested.
If the Russell 2000 fails to open above the 2,986-2,987 level tomorrow then it will become resistance instead. If it opens above it and breaks through it, then we'll have to wait to see how it closes for a new trend to develop. Right now its only other support would be from its prior downtrend (purple) just below 2,800 which is extremely unlikely to be tested as that is over 6% away.
