Rebalancing continues as Tech dives – Dow Jones & US Index Outlook

Ben Graham · February 4

Stock Benchmarks maintain strong divergence with the Dow Leading while Nasdaq falls
Tech sector is being rejected from high valuations and AI repricing
Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

The age of passive investing is now long gone.

Tech investors who had the easy job of buying and waiting to generate enormous returns are now under heavy scrutiny as a new age commences.

As expressed in this excellent piece, AI is now reaching the stage of creative destruction.

As the AI Bull trend began, almost everything remotely linked to Tech and Semiconductors was getting lifted in a hurry. Still, the funnel is reducing back towards the real winners and losers of the Revolution – And there will be many.

The Tech sector remained pushed by the new era of internet dominance across purchasing behaviors and new ways to interact between buyers and sellers – look at Airbnb and Uber, for example.

For example, individuals now use AI for a wide range of uses, including research, coding, writing emails, and more.

So logically, many of the Tech firms that specialize in these areas will now be useless middlemen.

So what are investors turning to? Value.

AI won't replace potato fields (at least for now) or replace chemists, machine producers, etc.

Surely, it will assist and improve the efficiency of these traditional processes, but it definitely won't replace the firms that provide what humanity needs to live.

In that regard, Farming, Healthcare, Consumer Defensives, Homes & Building, Railroads, etc., are seeing some new inflows, which are translating into the Dow Jones' outperformance against the Nasdaq.

Rebalancing continues as Tech dives – Dow Jones & US Index Outlook - ExpertFX School — Dow Jones to Nasdaq Relative Strength – Source: TradingView. February 4, 2026

The Dow Jones to Nasdaq ratio, mentioned in our previous day Stock Market analysis actually just broke back above the key 2.00 level – Watch for the development of a new trend for Stocks here.

Let’s dive into today’s session charts and key trading levels for the major US indices: the Dow Jones, Nasdaq, and S&P 500 as profit-taking flows could confirm the broader range.

Dow Jones 2H Chart and Trading Levels

The divergence is now quite visual with the Dow Jones testing its all-time highs while Nasdaq trends lower (see below).

Still, a couple of technical warnings are arising.

The short-term price action is forming a bearish RSI divergence and coupling this with the inability to decisively break the 49,650 Resistance area, the outlook isn't immediately bullish.

The picture remains rangebound, as confirmed by the flat 200-period 2H MA.

A decisive break and close above 50,000 would cement the bull case for the DJIA.

Dow Jones technical levels for trading:

Resistance Levels

ATH Resistance From 49,600 to 49,700
Tuesday Highs 49,681
All-time Highs 49,710 (CFD) – Index ATH is at 49,653
50,000 Potential Psychological Resistance

Support Levels

Intraday Pivot 49,200 to 49,350
Pivotal Support – 49,000 to 49,100 (Bull above, Bearish below)
Intraday Support 48,600 to 48,700
Key Support around 47,500
45,000 psychological level (Main Support on higher timeframe)

Nasdaq 2H Chart and Trading Levels

Having broken its Greenland-Crisis lows, the picture looks very different compared to the Dow Jones and now looking decisively bearish.

A measured move to the downside (purple square) is developing, hinting at the current selloff stalling at around 24,600.

Depending on Alphabet earnings, the index could see some dip-buying around here but Bulls will have to push back above 25,100 to help with the bearish prospects.

Nasdaq technical levels of interest:

Resistance Levels

Minor Support now Pivot 25,000 to 25,250
Mid-range Pivot 25,200 to 25,500 +/- 75 pts
Pivotal Resistance 25,700 to 25,850
26,246 FOMC highs
All-time high resistance zone 26,100 to 26,300

Support Levels

Measured Move target ~24,600
24,500 to 25,600 Key Support
October - November Support 23,800 to 24,000
Early 2025 ATH at 22,000 to 22,229 Support

S&P 500 2H Chart and Trading Levels

The outlook for the S&P 500 isn't much brighter than its Higher-Beta tech peer.

Another measured move to the downside is forming in the Spoose and hinting at a test of the 6,810 level.

Any break below will give a pretty nasty look on the bigger picture.

S&P 500 technical levels of interest:

Resistance Levels

Key Pivot Zone 6,880 to 6,900
Previous ATH Resistance 6,945 to 6,975
Session highs 6,950
Current ATH 7,020
All-time High Resistance 7,000 to 7,020

Support Levels

Mini-Support 6,830 to 6,850
6,810 measured move target
6,800 Psychological Support
6,789 Greenland lows
6,400 Major psychological support

Safe Trades and keep an eye on headlines!

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