The costs of hesitation – Dow Jones and US Index Outlook

Ben Graham · Thursday at 16:58

US Stock Benchmarks are stuck in a tight range, waiting for geopolitical clouds to dissipate
Indexes remain at their highs, and traders are hesitant
Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

Numerous counteracting factors are preventing much progress in the Stock Markets, which are stuck in a two-day tight consolidation range.

On the rough side, geopolitics and positioning are hurting sentiment.

Pre-war trading for Equities has never been too bullish.

Yes, War is profitable, particularly for US Companies that benefit from their competitive Defense industry while remaining far from the action. The Atlantic and Pacific Oceans are quite extensive moats for the United States.

The issue stems from the fact that Stocks are susceptible to changes in mood, and such game-changing tensions usually weigh on risk appetite.

The costs of hesitation – Dow Jones and US Index Outlook - ExpertFX School — War Times and Stock Market performance – Courtesy of FeroFinancial

About an hour ago, President Trump did signal further progress in discussions with Iran, but, as we have expressed many times in our views, deception tactics are common in the Art of War, and it would be too easy if things were so straightforward.

Positioning is also at some 5-year extremes, which prevents participants from pushing for more, particularly given the current themes and trends.

On the bright side, however, Markets are receiving powerful fundamental backdrops from recent data.

Just last week, traders welcomed a stronger Non-Farm Payrolls report, confirmed by this morning's lowest Jobless Claims in 5 weeks, pushing back against the weakening trends in the labor Market (206K vs 225K expected).

Good news for the economy, but less suitable for those thirsty for Federal Reserve cuts. To help with these cut expectations, however, last Friday's CPI report came in softer than expected, now closer to 2% than 3% for the first time since 2021. Participants will be awaiting tomorrow's Core PCE report before confirming the cooling. Exciting times are coming.

This also coincides with 74% of reporting Firms beating their earnings estimates—a very decent backdrop from the US Economy (despite growing imports hurting the GDP outlook).

Overall, the dynamics are challenging to deal with. So when they are tough to understand, there are some interesting dynamics to trade. Fade the extremes as long as nothing changes.

Take quick profits and losses, and get ready to act if the picture shifts. With volatility comes opportunity.

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.

Current Session's Stock Heatmap

The picture is more red than mixed overall, with Markets not really responding to the latest announcements from Trump. Defensive Stocks are outperforming, particularly in the HALO stocks, but the current session's Heatmap is mostly unchanged if not red.

Dow Jones 2H Chart and Trading Levels

Intraday volatility is dying off in the past few trading days, with triangle formations showing up on the shorter timeframes.

Taking a small step back, the DJIA is really just holding between a 49,000 to 49,900 range which could be interesting to play around ahead of the weekend (and as long-as nothing happens in the Middle East).

Now below its key Moving Averages, the path of least resistance is poised to the downside for the current session, confirming with the 2H RSI falling below neutral. Look at reactions at the lows of the range.

Dow Jones technical levels for trading:

Resistance Levels

Immediate pivot 49,500 (50 and 200 2H MAs)
49,900 to 50,000 Resistance (Range Highs)
Intraday Resistance 50,250
ATH resistance 50,400 to 50,500
Index All-Time highs 50,512

Support Levels

Major Support – 49,000 (Range lows)
Past week 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

Nasdaq is also containing its action within a tight range, currently located between 24,500 and 25,000.

While chances for the range to hold are elevated amid current hesitation, profit-taking could push prices back towards the 24,200 intraday support, particularly as momentum turns bearish on the intraday.

Nasdaq technical levels of interest:

Resistance Levels

Key Pivot 25,000 to 25,250
25,400 to 25,500 Key intraday resistance
Pivotal Resistance 25,700 to 25,850
26,246 FOMC highs
All-time high resistance zone 26,100 to 26,300

Support Levels

24,500 to 25,600 Minor Support
February Support 24,150 to 24,200
February 5 lows 24,165
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 Spoose could become the most bearish Index, currently forming a bear channel.

While the current selloff is still very contained, sellers taking control could push prices back towards the February lows around 6,730.

To confirm, sellers will have to push below the 2H 50-period Moving Average (6,853), acting as immediate support.

S&P 500 technical levels of interest:

Resistance Levels

4H 50-MA 6,900 (immediate rejection)
Session top 6,911
Previous ATH Resistance 6,945 to 6,975
Current ATH 7,020
All-time High Resistance 7,000 to 7,020 (range highs)

Support Levels

Mini-Support 6,830 to 6,850 and 2H 50 MA (testing)
6,800 Psychological Support
February lows 6,730 (Higher timeframe range lows)
6,400 Major psychological support

Safe Trades and keep a close eye on the US-Iran developments!

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