The markets rallied sharply today after President Trump announced last night that he would be extending his deadline for Iran by two weeks. This came after push from Pakistan's Prime Minister yesterday to extend the deadline as they tried to mediate the situation. While President Trump agreed to stop attacking Iran for two weeks, he said that it was contingent on Iran opening the Strait of Hormuz while they negotiate a deal. Futures soared on these reports overnight and the markets held most of their gains today. The Russell 2000 closed up 2.97% while the Nasdaq finished higher by 2.8% and the S&P also gained 2.51%. With the sharp rally, volatility got crushed again and the VIX briefly dipped back below $20 before closing at $21.04 for a loss of 18.4%.
In the afternoon there were a couple of reports that came out that sent stocks lower intraday before they rallied back into the close. An Iranian spokesperson said the ceasefire negotiations were unreasonable and that the U.S had broken the ceasefire agreement. Iran claims that three parts of the 10-point proposal had been broken, and because of this they shut down the Strait of Hormuz again. There were also reports that an oil tanker tried to pass through it, but was forced to return to Gulf waters. These reports did send stocks a bit lower and gave provided some of a bounce to oil, but oil still finished the day down 14.5%.
With the massive rally today, the markets did start new uptrends as they gapped and closed above their prior uptrend resistances. However for the Nasdaq it's extremely unlikely it opens above its new primary uptrend tomorrow as it will be at 23,400 which is 3.4% away. It's also unlikely it even gets tested after today's big move. The next key level to watch will be from its prior uptrend (yellow) at about 22,750. It could potentially open above this level in which case it would be support, but it's still about 0.5% away. Odds are it opens below it and that level would be resistance on a rally attempt. From there the next support to watch on a pullback would be from its next uptrend (blue) at about 22,580. If that doesn't hold, the next support to watch will be from its prior sideways range (purple) at 22,280. If there's a big sell-off and we fill today's gap, the next support to watch would be from its prior uptrend (yellow) again which is right around 22,000.
The S&P had a stronger finish than the Nasdaq, not by percentage, but in the sense that it held more of its gains. However, it's also extremely unlikely that it will open above its new primary uptrend (white) tomorrow as that level will be at about 6,940 which is 2.3% away. For now, the first key level to watch will be at about 6,807 from its yellow uptrend. It could potentially open above this level if we get another gap up, but if it doesn't it will be the first realistic resistance level to watch. If it does gap or break through it, then its next uptrend (purple) would be resistance at 6,870.
On a pullback, the first support to watch will be from its blue uptrend at about 6,759-6,760. If that doesn't hold then its next support would be further away at 6,634 from its yellow uptrend again (bottom end of the range). Lastly, its blue uptrend would come into play again at 6,595 and a pullback to that support would also fill today's gap at 6,616.85.
The Russell 2000 looks a bit different here as it also started a new uptrend, however it's likely to remain in this new primary uptrend (white). But the first level to watch will be from its prior uptrend (yellow) at about 2,618 which it closed just above today at 2,620. If it opens above this 2,618 level then that will be support but if it gaps back under it, then it'll be the first resistance level to watch. If it opens or breaks above it, the next resistance to watch will be at 2,640 from its next uptrend (purple) and then its last resistance will be at 2,660 from its new primary uptrend (white).
On a pullback, the first support to watch will be at 2,573 from its prior uptrend (purple) and then its new primary uptrend (white) would provide support at about 2,562. The last support to watch would be from its yellow uptrend at 2,532 in the event of a big sell-off again. This would also fill today's big gap at 2,547.91.
