Stock Markets Cheer Newfound Freedom to Begin 2026 — US Index Outlook

[Ben Graham]

Most traders are now back in rhythm after a long but well-deserved Winter holiday break.

2025 has been a particularly adventurous rollercoaster, marked by the most volatility across asset classes in the year.

Debasement trades, de-dollarization, AI, wars, Trump dramas, and TACOs, crypto ups and downs, and much more – trends, volatile ranges, and breakouts defined a much more active yearly session after years of doubt, as traders and asset managers agreed on the same principles.

Risk assets were cheap, particularly after Liberation Day, so everyone went in – Valuations are now getting elevated, but the limit could still be far.

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Global Stock Markets Performance in 2025 – Source: TradingView

Markets received some pessimistic signs from the ISM Manufacturing PMI report, but when examining the current Market picture, traders are uniting behind hopes of more rate cuts.

The answer to this should be confirmed further on Friday with the upcoming NFP report (8:30 A.M.).

Another prospect boosting sentiment is the return of a proactive American foreign policy, for the US' own advantage – The capture of Venezuela's Maduro brings back Imperialism on the menu.

Even if wars tend to dampen sentiment, the effect is often short-lived as investors learnt how profitable they are for US companies.

But overall, the vibe from the Market is one of Freedom.

Venezuelans seem to be content with the situation (from what we can see), and Americans are proud.

Investors will hope this positive sentiment endures, while traders can simply rejoice from the volatility.

Let's dive into our daily intra-session charts and trading levels for the major US Indexes: Dow Jones, Nasdaq, and S&P 500.

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Current picture for the Stock Market (13:30 P.M. ET) – Source: TradingView – January 5, 2025

Read More:

• 2026 US Dollar Forecast: How the Fed, Government Spending, and AI Will Drive Volatility
• Market Implications for Venezuela President Maduro's Capture – WTI Oil and Dow Jones to New Highs!
• Top Economic and Geopolitical Themes to Watch for Markets and Traders in 2026

Dow Jones 2H Chart – Double Top broken

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Dow Jones (CFD) 2H Chart – January 5, 2025 – Source: TradingView

Bulls came in hungry to start the year, pushing the Industrial Index to new All-Time Highs once again.

A very positive sign to undo the January 2 drops, but even more when considering that buyers broke above a preceding double top.

This can be a sweet sign for a breakout (as short-sellers get caught and have to buy-back their positions higher). This effect can be short-lived but still has a positive effect.

On the very short-run, the buying could see some stalling as the RSI reaches overbought levels. Nevertheless, the daily candle is a huge one, so further upside could be warranted.

In the event of a retracement, keep a close eye on the 48,800 to 49,000 for a break-retest scenario.

Dow Jones technical levels for trading:

Resistance Levels

• Potential mini-resistance around 49,300 (breaking) 1.382 Fib-Extension
• Potential Resistance from 49,420 to 49,500
• 49,244 Session highs
• 50,000 Psychological Level and Higher timeframe Fib Target (50,159)

Support Levels

• Christmas ATH as current pivot – 48,870 to 49,000
• November ATH 48,300 to 48,500 mini-support
• Psychological Support at 48,000
• Key Support 47,000 (+/- 150) and MA 200
• 45,000 psychological level (next support and main for higher timeframe)

Nasdaq 2H Chart – Still not back to 100%

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Nasdaq (CFD) 2H Chart – January 5, 2025 – Source: TradingView

The tech-heavy index has been struggling to return to its preceding record established in October (26,182), currently trading shy of 3% from there.

Sellers are re-entering the field around the 25,500 resistance zone leading a triangle consolidation, a technical formation to keep your eyes on for future breakouts.

The intra-day selloff has already occurred and some dip-buyers are entering the action at the 2H 200-MA.

The action should be more balanced in the tech-index, so watch the session highs for a bullish breakout and a break below the 200-MA for a bearish pullback.

Nasdaq technical levels of interest:

Resistance Levels

• Mini-Resistance 25,500 +/- 75 pts (recent rejection)
• intermediate resistance 25,700 to 25,850
• All-time high resistance zone 26,100 to 26,300
• Current ATH 26,283 (CFD)

Support Levels

• 25,400 200-period MA Support (immediate test)
• 25,150 Triangle formation lows
• Pivot 25,000 to 25,250 Momentum pivot
• 24,500 Main support
• October and November lows just below 24,000
• Early 2025 ATH at 22,000 to 22,229 Support

S&P 500 2H Chart – Close to a breakout

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S&P 500 (CFD) 2H Chart – January 5, 2025 – Source: TradingView

The short-term bear channel formed from the December All-Time High peak is now seeing a breakout, leading to a bullish outlook.

The 6,930 Psychological level is acting as short-term resistance (session highs).

The RSI is not overbought yet but in any case, traders will need to watch whether buyers push to new highs (elevated breakout odds).

For support, watch a return to the 2H 50-period MA. A break below would mark further downside potential.

S&P 500 technical levels of interest:

Resistance Levels

• Range High Resistance 6,880 to 6,900
• 6,930 (current All Time-Highs)
• Weekly highs 6,896
• Mid Range 6,850
• ATH Resistance 6,900 to 6,930

Support Levels

• 6,800 Psychological Pivot and Range lows
• Mini-Support 6,720 to 6,750 (current test)
• Session lows 6,750
• Support 6,720 to 6,750 and 8H MA 50
• 6,490 to 6,512 Previous ATH October lows (recent lows)
• 6,400 psychological support

Safe Trades and a Successful 2026!

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