Small caps were down big today with the Russell 2000 closing down 1.82% while the Nasdaq gained 0.34% and the S&P finished flat, closing up 0.03%. In yesterday's update I talked about this exact scenario with a rotation out of small caps and back into tech after pointing out the failed breakout for the Russell 2000 on the daily. Next week there will be a lot of big tech earnings with AAPL, META, MSFT, and TSLA all set to report and potentially fuel a continued rotation back into tech and specifically the Mag 7.
The Nasdaq did break and close above its daily downtrend resistance today and this starts a new uptrend for it going into next week. However, due to the big gap from Tuesday, it essentially 'reset' the technical setup. If you go back to Tuesday's update, I noted that the market was setting up for a bounce because of that big gap and it already being at the bottom of its new range. Well the same thing goes for today's new uptrend - it's already at the top of this new range. So while it's not necessarily bearish, there is room to pullback in the new uptrend. But, the prior downtrend that it closed above today (yellow) and its prior uptrend (purple) will both act as supports on a pullback.
So the first support to watch on Monday will be at 25,500 (yellow) assuming there is no gap below it. If it does gap down below that level, then it becomes resistance again. After that, its prior uptrend (purple) will also be support at about 25,375 if there's a larger pullback. Meanwhile resistance from its new uptrend will be at about 25,750.
The S&P was basically unchanged today and it did break just above its prior uptrend resistance again, but it also failed to close above it again. For now, nothing changes for it on the daily and it remains near the middle of its big primary (white) trend. For Monday its prior uptrend (purple) will remain as resistance and that level will be at about 6,935. If it gaps above it, then that level becomes support. After that the next big resistance will be at 6,982 which is from its primary (white) trend again. Support on the other hand is very far and will be around 6,787, also from its primary trend, if we were to get another big market sell off.
Small caps were the big loser today right from the open as the Russell 2000 opened below its primary uptrend support of 2,715 that I mentioned in yesterday's update. I noted there was risk of this gap down below that key level which led to the rotation into tech. It never broke back above that 2,715 level as the open at 2,712.70 was the high of the day. It also broke through its prior uptrend supports at 2,704 and 2,690 so those are no longer valid. With today's sell off and break of its previous uptrend (purple) it now does start a new daily downtrend. Support from this new downtrend (white) will be at about 2,640 on Monday while resistance from it will be at about 2,690. If it gaps above the 2,690 level, then that area would be support, and then there would be resistance from the prior uptrend (purple) at about 2,745.
