Semiconductor and AI themed stocks sold off again today despite TSM reporting strong earnings. This comes after semis failed to rally on ASML's blowout earnings yesterday. There has been a clear rotation out of these names and into other tech stocks that have lagged - mostly the Mag 7 and software names. The two largest semiconductor etf's, SOXX and SMH, are now down 19% and 15% from their all time highs in late June. Semis sold off again today and were drags on the Nasdaq which underperformed, closing down about 1.5%, while the S&P lost 0.5%. The rotation was into small caps which outperformed, however it also closed slightly lower posting a loss of 0.06%. The VIX settled up 6.76% at $16.73 with today's pullback, but it was off of the highs of $17.23 thanks to a last minute rally in the markets.
For tomorrow the Nasdaq continues to trade in it's primary daily downtrend (white), so nothing changes for it again. This is the only daily range to watch with the top of the range being resistance at 26,575-26,600 for tomorrow while support will be at 24,875-24,900.
The S&P also remains within its primary daily uptrend (white), so nothing new gets started for it either. Its primary uptrend will continue to be the only resistance level to watch for now which will be at 7,655-7,660 tomorrow. This range will also be the first level of support at 7,345-7,350 on another sell-off. The last support to watch would be from its prior downtrend (yellow) at about 7,315.
The Russell 2000 broke above its previous daily downtrends this morning and I started a long position in IWM because of that. Now the rally did fade and the Russell failed to close above those downtrends, however it made a higher high which now starts a new uptrend for it which is why I got long. I also added to my position just after the market close because of where the Russell 2000 closed at.
For tomorrow, the Russell's new primary uptrend (white) will be support/resistance at 2,972-2,973. This is just below today's close of 2,974.56. So it doesn't need a gap up tomorrow to open above its primary uptrend. A flat open will suffice, however a gap up is still ideal. The first resistance to watch will be from its prior downtrend (blue) at 2,980-2,981. A gap above this level would be ideal so it can act as support as well. Its last daily resistance will be from the new primary uptrend that it started today at about 3,005.
If the Russell fails to open above the 2,972-2,973 level (primary uptrend) tomorrow then that area would become resistance. The next support to watch on a pullback would then be from its prior downtrend (yellow) at 2,967-2,968. If that doesn't hold, or it potentially gaps below it, then the next support would be much further away at 2,900-2,905 (blue - bottom of the range) with more just under 2,900 from its next downtrend (purple).
