Semiconductors recovered after Friday's sell-off with the SOXX jumping over 4% and SMH up 3.3%. This helped tech outperform today as the Nasdaq closed up 2.07%. The S&P was also strong, gaining 1.18% and finishing just off of the highs of day. However, small caps lagged as the rotation that we had seen into them over the past couple of weeks reversed again with tech outperformance. The Russell 2000 was down for most of the day and ended up finishing flat, up 0.01%. With the rally in markets today, the VIX pulled back again, closing down 4.1% at $17.65.
For tomorrow on the Nasdaq nothing changes as it remains in its wide primary daily downtrend (white). That range will be resistance right around 26,100 tomorrow. If it can break through it, the last resistance in play would be from its prior uptrend (purple) at about 26,400.
The only support to watch for now will also be from its primary downtrend which will be at about 24,200. However this level is over 6% away so it's extremely unlikely that it's actually tested. The much more likely scenario is that it continues higher to test resistance, or simply remains range bound in this primary downtrend for now.
The S&P also remained within its primary downtrend today, so it doesn't start any new ranges for tomorrow either. Its primary downtrend (white) will again be the first resistance to watch tomorrow at 7,457-7,458. If it can break through it, the last daily resistance in play will be from its prior uptrend (blue) at 7,540-7,545.
On a pullback, similar to the Nasdaq, its support levels are very far away and are unlikely to be tested. The first will be from its prior sideways range (purple) at about 7,150 which is nearly 4% away. Its primary downtrend (white) is even further at 7,110-7,115 and it has more supports underneath that. But, it's much more likely we see a continuation of the rally to test resistance and start a new primary range.
The Russell 2000 broke through its last primary uptrend support from Friday, but it did rally back to close above it - giving it a failed breakdown on the daily and starting a new trend. However, it also made a lower high/lower low so the new trend it starts is down.
While it does start a new downtrend, it was a strong finish near the highs of day and so it could just open above its new primary downtrend (white) tomorrow. That level will be at about 3,006 which is below today's close of 3,010. So as long as it doesn't gap below it tomorrow, it will open above it and act as support on a pullback. From there, the next resistance to watch on a rally attempt will be from its prior uptrend (yellow) at about 3,038. If it can break through it, the last resistance in play will be from its next uptrend (blue) at about 3,062.
If the Russell fails to open above its new primary downtrend (white) at 3,006 tomorrow, or if it opens above it but breaks through it, then the next support to watch will be from its prior uptrend (blue) at about 2,998. If that doesn't hold, the last support to watch will be from its primary downtrend (white - bottom of the range) at about 2,960.
