The markets added to yesterday's bounce with small caps leading the way this time as the Russell 2000 jumped 1.65%. The S&P added 0.28% while the Nasdaq lagged and posted a slight loss of 0.02%. However, it rallied back well off of the lows of the day. With the bounce back, the VIX fell over 6% to settle at $17.31, but for now it remains in backwardation. Tomorrow afternoon we will get some big tech earnings with LRCX, META, TSLA, and TXN all set to report after the close.
The Nasdaq gapped down again this morning but it didn't gap below the 26,215 level from yesterday's failed breakout which I noted was the key level that it needed to open above for bulls to have the upper hand. It did rally back and break through yesterday's primary downtrend, however it failed to close above it again. It wasn't a significant break through it, so it's not a short signal. But it now starts a new primary trend which is essentially a sideways range so it does add another level of resistance for tomorrow.
The first resistance to watch will be at about 26,490 (light purple) which will be a retest of today's failed breakout. This is only about 0.25% away from today's close of 26,424, so there is potential for a gap above it tomorrow in which case that 26,490 area would become support. The next resistance to watch would be from its new primary range (white) at about 26,590 which it could also potentially gap above. If that were to happen, the 26,590 area would become support as well. The last resistance to watch would then be from its prior uptrend (teal) at 26,800-26,825.
If the Nasdaq fails to gap above the 26,490 level (light purple) then this level will remain as resistance for now. On another pullback, the first support to watch will be from the bottom of its new primary range (white) at 26,150-26,175. If this doesn't hold, the next support will be at 25,975-26,025 from both of its next 2 downtrends (blue and red). This would be a big level to watch where those 2 trends intersect and it would likely be the last daily support that comes into play for tomorrow.
The S&P had a strong breakout above its prior downtrends today, including its previous primary downtrend, and now it starts a new primary uptrend (white). The first key level to watch for tomorrow will be from its prior downtrend (teal) at about 7,708. The S&P finished at 7,712.57 today, so as long as it doesn't gap back below it, the 7,708 area will act as support. From there on a rally attempt, the only resistance to watch will be from its new primary uptrend at about 7,810.
If the S&P does fail to open above the first key level (teal) at 7,708 then this would become resistance. The next support levels to watch on a pullback would be at 7,685-7,687 from the bottom of its new primary uptrend (white) and there would be more just below it at about 7,680 from its next downtrend (green). If neither of those hold, the last support that potentially comes into play would be from its next downtrend (orange) at 7,642.
The Russell 2000 was very strong today but remains in its big primary downtrend which continues to be the only range to watch for now. It is getting closer to the top of the range which it may finally break through this week. That will be resistance at 2,820-2,825 for tomorrow while the bottom of the range will be support at about 2,640.
