US Stocks rebound after gap-down; Month-end flows incoming – Dow Jones and US Index Outlook

• US Stock Benchmarks got it harsh at the open after 1% gaps lower across the board
• Dip-buyers are coming back heavily, leading to a strong rebound towards mid-day
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500 ahead of Month-End trading

Another crazy month for Markets is ending today, and investors are sighing after an impressive gap lower.

The reasoning behind the risk-off flows was that US Embassies in the Middle East had called for their staff to prepare security measures over the weekend, leading to a spike in Oil to $68 and a rough pre-open session.

Dow Jones was leading Indexes lower, dipping to -1.78% before rebounding.

Benchmarks are now attempting to erase the entire overnight drop; however, this may prove difficult as traders prepare for a volatile session close, pulled on both sides by weekend risk and month-end flow volatility.

The rebound is strong, with recent Chicago PMI data (57.7 vs 52.8 exp) confirming that US data is far from weakening; quite the opposite, in fact.

Produce Prices have risen to 8-month highs amid elevated activity, further pressuring prices. This could prevent further rate cuts and hurt sentiment in the near term.

This will prove challenging for risk sentiment, but looking at the immediate action, bulls and bears are just fighting within a range.

Let's look at the technical situation by diving into today’s session charts and key trading levels for the major US indices: the Dow Jones, Nasdaq, and S&P 500.

Read More:

• WTI Oil plays tricks ahead of weekend risk – WTI Technical analysis
• Weekly Gold (XAU/USD) Forecast: US-Iran standoff trumps US PPI, setting stage for $5300/oz
• US PPI hotter than expected and risk-off flows – Market reactions

While the Dow struggled the most during overnight futures trading, defensive stocks are taking the lead again against the tech and financial sectors, seeing a second consecutive day of outflows.

Nvidia is leading to the downside along with JP Morgan, as investors keep punishing the record numbers and projections and rotating back to the more traditional, HALO stocks.

It seems that participants are agreeing that we are slowly shifting towards the late-cycle in the most powerful economy.

The DJIA is crossing back below the 49,000 psychological.

With all due respect to the volatility of recent action, this recent price action really just resembles another establishment of a 1,000 point range within the Index – Holding between 48,600 and 49,600.

The immediate action is a doji, so hesitancy will contain the action until either bulls or bears take the hand:

• Watch for a break above 49,041 for more upside
• For more downside, watch for a move below 48,750
• Keep a close eye on the formation of a short-timeframe bear channel

Dow Jones technical levels for trading:

Resistance Levels

• Intraday Channel highs and 2H 50-period MA 49,200
• January ATH Resistance 49,500 to 49,700 (rejection)
• Past session highs 49,850
• 49,900 to 50,000 Resistance (Range Highs)
• Index All-Time highs 50,512

Support Levels

• Session lows and Past week Support 48,660 to 48,750 (bearish below)
• November ATH 48,300 to 48,500 Minor Support
• Key Support from 47,500 to 48,000 (Next main Support)
• 45,000 psychological level (Main Support on higher timeframe)

Nasdaq is looking confused again – and if confusion doesn't inspire you, it could always be safe to look elsewhere.

A short term, strangely looking double bottom hints at a short-term bounce.

However, the 2H 50-period MA will be acting as immediate resistance. Failing to breach it could lead to further downside (watch the 24,740 intraday support)

Nasdaq technical levels of interest:

Resistance Levels

• 25,000 Pivot Level and 2H 50-period MA
• 25,400 to 25,500 Key intraday resistance
• All-time high resistance zone 26,100 to 26,300

Support Levels

• Mini-intraday support 24,744 (bearish below)
• 24,500 to 25,600 Key Support (Range Support)
• February Support 24,150 to 24,200
• October - November Support 23,800 to 24,000
• Early 2025 ATH at 22,000 to 22,229 Support

The S&P 500 also looks quite mixed, which points at similar breakout potentials as the Dow Jones.

• Any move below session lows (6,832) would point to downside continuation
• A reversal above the 50 and 200-period MAs (~6,890) would lead to a quick test of 7,000

S&P 500 technical levels of interest:

Resistance Levels

• 50 and 200 2H MAs (~6,890)
• Previous ATH Resistance 6,945 to 6,975 (testing)
• Current ATH 7,020
• All-time High Resistance 7,000 to 7,020 (range highs)

Support Levels

• Session lows 6,832
• Current Range intraday Support 6,820
• Mini-Support 6,830 to 6,850
• 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 & Month-end flows!

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