Futures opened higher on Sunday night and continued higher into the market open this morning with tech leading the way as the AI trade recovered some of last week's big sell-off. The Nasdaq closed up 1.11% while the S&P and Russell 2000 only gained 0.41% and 0.25%, respectively. The bounce faded a lot into the close and both the S&P and Russell finished near the lows of the day. The Nasdaq held up a little better, but also finished closer to the lows. With today's bounce back, the VIX closed down 7.75% which was also well off of the lows of day as it recovered into the close with the market fade. The VIX also remains in backwardation for now.
The Nasdaq broke through Friday's primary downtrend but failed to close above it with the late day fade. This gives it another failed breakout and starts a new primary downtrend (white). The good news for bulls is that while it was a strong failed breakout which would normally be a short signal, it was a strong enough finish and tomorrow it just needs to avoid a big gap down to open above the retest of this failed breakdown (red) at about 26,215. The Nasdaq closed at 26,430 today which is about 0.80% above that 26,215 level. So as long as there's no big gap down again tomorrow, the 26,215 area (failed breakout retest) will act as support rather than resistance. On another rally attempt, its new primary downtrend (white) will be the first resistance to watch at about 26,550. If it can break through it, the last resistance in play will be from its prior uptrend (teal) at about 26,775.
If the Nasdaq does have a big gap down tomorrow below the 26,215 area (red - failed breakout retest), then this area will act as resistance. If it does open above it, but still breaks down below it again, the next support to watch will be at 26,025-26,050 from its next downtrend (blue). If that doesn't hold, the next support will be at 25,950-25,960 (green). After that, the last daily support that would potentially come into play tomorrow would be right around 25,900 from the bottom of its new primary downtrend (white).
The S&P also had a failed breakout today similar to the Nasdaq, though it was a much weaker failed breakout. Similarly, there is potential to open above the retest of the this failed breakout tomorrow along with its new primary downtrend. So there is a silver lining here and tomorrow's open is very important.
The first resistance level to watch tomorrow will be at 7,695 (orange) which is just above today's close of 7,690.73. If it can get a small gap up above that 7,695 level then it will act as support. Its new primary downtrend (white) would then be next 7,705 which also is not far from today's close and there's potential for an open above it in which case it would also become support. The last daily resistance to watch will be at about 7,725 (teal) which is about 0.50% away, so there is potential for a gap above it as well though it's a little further away.
The first support to watch will be at about 7,680 (green) which would be a retest of today's failed breakout. Since the S&P closed above it today at 7,690.73, it just needs to avoid a gap below it for it to remain as support. If it does gap below the 7,680 level tomorrow then it along with every other level mentioned above would be resistances. After that, the next support is further away at about 7,610 (blue). There will be several supports below this as well at 7,600 (teal and orange), 7,595 (purple), and then the bottom of its primary downtrend (white) at 7,580.
The Russell 2000 is still trading in its big primary daily downtrend which remains as the only range to watch on a daily time frame, and it's essentially in the middle of the range so it's unlikely that it breaks one way tomorrow. Resistance will be at 2,825-2,830 from the top of the range while support will be at 2,645-2,650 from the bottom of the range.
