There was a big divergence between small caps and the rest of markets again yesterday as the Russell 2000 closed down 0.50% while the Nasdaq and S&P closed higher by 0.40% and 0.17%, respectively. The VIX meanwhile fell another 4% and settled below $15 again at $14.81. Oil did pull back about 2% but yields continued to climb with the 10 year finishing right around 5%.
The Nasdaq did close above its previous primary downtrend to start a new daily uptrend. The problem now is that it needs to gap up again on Monday to open above this new primary uptrend (white) which will be around 26,600. It's only about 0.3% away from Friday's close of 26,522, so it is possible to get that gap up. However, if it fails to do it, that 26,600 area will become resistance from both that primary uptrend (white) and its prior downtrend (blue) where the 2 trends intersect. And on a pullback, the only daily support that likely comes into play will be from its next downtrend (orange) around 26,435.
The S&P as expected failed to gap above its primary uptrend that it started on Thursday which helped lead to the early pullback. But it did rally back and make a higher high on Friday, so it still starts a new primary uptrend for Monday. Its new primary uptrend (white) will be the first resistance to watch on another rally attempt at 7,687-7,688. If it breaks through it, the next resistance to watch will be from its prior downtrend (orange) right around 7,700. The last 2 resistances would be at 7,710-7,715 from its next 2 trends (yellow and blue).
On a pullback, the first support to watch will be at 7,590 from its prior sideways range (purple). If that doesn't hold, it will have more support at about 7,570 from both its prior downtrend (green) and its new primary uptrend (white) where the 2 trends intersect. If those don't hold, the next support will be at 7,563 (blue) and its last daily support will be at about 7,544 (orange).
The Russell 2000 continues to trade within its big primary downtrend so it doesn't start any new daily ranges again. The first resistance to watch will be from its prior downtrend (yellow) at 2,880-2,881. If it breaks through it and there's a big rally, the last daily resistance to watch for Monday will be from its primary downtrend (white) at about 2,938.
On a continuation of the pullback, the first support to watch will be at 2,829-2,830 from its prior downtrend (purple). If that doesn't hold and there's a big sell-off then this same range (bottom of the range) will be the next support at about 2,775. If that doesn't hold either, the last support will be from its primary downtrend (white) at about 2,755-2,757.
