Today was the first trading day of 2026 and it was a bit of an odd one to say the least. There was a big gap up in the morning with QQQ leading and gaining as much as 1.4% at the highs of the day. But in the morning markets saw a sharp reversal and quickly went negative. While QQQ was leading in the morning, it finished the weakest, closing down 0.19%. SPY managed to finish green, up 0.18%. Meanwhile IWM was the standout after lagging in the morning as it finished up 1.06%.
In my update yesterday (monthly update) I noted that I was looking for a short trade in QQQ above $618 with its first monthly resistance at about $619. The problem is that QQQ gapped up above $619 and it made me stay out of this short trade. I considered entering short above $622 with that next resistance around $622.50, but because of the gap up and early test and hold of the $619 area this morning I decided to play it safe and just sit it out. Well, QQQ put in a high of $622.85 this morning before the sharp sell off down to about $610. So unfortunately I missed what would have been a great trade. But that's alright, onto the next one.
For the daily update, we'll start off with QQQ today. In the last daily update, before the New Year's holiday, I mentioned that if QQQ failed to close above the $615.35 area today that it would start a new downtrend. That new daily downtrend is now official with today's close of $613.12 - well below the $615.35 support. For Monday, this new downtrend support will be at about $609.50 while resistance on a bounce will be at about $616.75 from the prior uptrend that it closed below (yellow channel).
SPY finally broke through its big daily uptrend support and it did close back above it to start a new uptrend. This will be its first new uptrend in several weeks. Now even though it was a failed breakdown, it wasn't a strong enough finish to be bullish. The first support to watch on Monday is at about $681.60 which would be the retest support of the failed breakdown. If that doesn't hold, or if it gaps below it, then the next support would be at about $680.70. This is the new uptrend support that it started with today's failed breakdown. We'll have to see how markets hold up on Monday and if these supports hold or not.
Lastly, IWM was the leader today and it finished strong - up over 1% and held most of its gains. It also broke through its prior downtrend resistances, but it also put in a lower low this morning during the early market reversal. Because of that, it still starts a new daily downtrend. Now this new downtrend resistance is going to be just below $249, and IWM finished at $248.78. So it's very possible that we could see a gap above it on Monday as it would require a very tiny gap up to accomplish this. If it does gap above $249 on Monday, then that area becomes support - and vice versa if it opens below $249. If it gaps or breaks above this level on Monday then we'll need to wait and see how it closes and go from there.
