Defensive Stocks Rotation ahead of NFP - Index Outlook and NFP Trading Levels

[Ben Graham]

The "Freedom Trade" hype has finally stalled after a relentless start to the year.

Traders are beginning to realize that geopolitical turmoil could deepen, as the Venezuela operation may have opened the door for further—and potentially more tumultuous—US military engagements. This anxiety is compounded by President Trump's recent pledge to increase military spending by $500B for 2026.

In an effort to calm tensions, US Secretary of State Rubio has finally accepted a meeting with Greenland, coming at a time when NATO faces its most significant stability challenges in 80 years.

Markets will undoubtedly remain on edge regarding these diplomatic shifts going forward.

On the economic front, the labor picture is brightening. US layoffs are looking much less concerning than they did through October and November, confirming the strength seen in the ADP data and Jobless Claims reports released earlier this week.

However, looking at the market picture for today's concluding session, investors are showing signs of caution.

We may see further rotation into defensive sectors as tech layoffs—driven by the deepening implementation of AI—continue to dominate the data. These flows also extend the narrative of overextended valuations that arose throughout the final quarter of 2025.

As we begin the New Year, reading between the lines of institutional and big player positioning is essential.

The Dow appears to be a heavy favorite for smart money; given how little chatter there is about this trade compared to the crowded consensus in Metals, I wouldn't be surprised to see it outperform.

Tomorrow brings a critical test: a finally up-to-date NFP report. While long-awaited since the US Shutdown disrupted timely releases, traders should remain wary—data gaps from the October-November stretch could still result in statistical biases and accuracy issues.

Ahead of tomorrow's US jobs report, let's dive into our daily intra-session charts and NFP trading levels for the major US Indexes: Dow Jones, Nasdaq, and S&P 500.

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Current picture for the Stock Market (15:59 P.M. ET) – Source: TradingView – January 8, 2026

Healthcare is giving back some of its heavy advantage acquired throughout the beginning of this week, leaving its spot for Consumer Defensives, Farming, Industrial and Energy sectors (WTI Oil is up a sneaky 4% today, check out our recent Oil report to get your trading levels).

Read More:

• NFP Preview: Federal Reserve’s Pivot at a Crossroads, Implications for the US Dollar & Nasdaq 100
• When the radar goes dark: Navigating the market after the COT report delay
• Markets Today: German Factory Orders Surge, Nikkei Slips as Markets Eye NFP Data & Supreme Court Tariff Ruling

Dow Jones 4H Chart – Rejecting Key targets but Holding Strong

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Dow Jones (CFD) 4H Chart – January 8, 2026 – Source: TradingView

The Dow, up +0.56%, is the clear leader of this early 2026 action, outperforming other Indexes which finish the session lower.

Keep an eye on further rotation as time goes and a return to an old geopolitical US regime could also provide a strong boost to industrials for the year to come.

Keep a close eye on the 4H 50-period MA (48,900) for NFP trading:

Acting as key support in today's rebound, staying above at the weekly close points to further upside for the month, while closing below shows further concerns.

Dow Jones technical levels for trading:

Resistance Levels

• Current ATH Resistance From 49,500 to 49,676
• 50,000 Potential Psychological Resistance
• 49,400 Session highs

Support Levels

• Christmas ATH Momentum Pivot & 4H MA 50 – 48,870 (above bullish, below bearish)
• 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)

Sidenote on the Dow Jones/Nasdaq Ratio

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Dow Jones/Nasdaq Weekly Chart, January 2026

The Dow Jones/Nasdaq ratio reached new all-time lows around October 2025, and with overstretched valuations in Tech and the current themes for 2026, this chart could prove to be a super strong indicator for Stock investing for the year.

Watch if the ratio breaks back above the 2.00 Level and what happens when it does.

Nasdaq 4H Chart – Double Top concerns?

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Nasdaq (CFD) 4H Chart – January 8, 2026 – Source: TradingView

With today's Stock Rotation, Nasdaq is still showing relative weakness compared to other indexes – It's closing down -0.555, a perfect mirror of the DJIA's performance/.

Forming a double top in yesterday's action, bulls will have to monitor if this is just a scare ahead of NFP or if it materializes into proper outflows in tech.

Explore our detailed analysis for the Nasdaq right here!

Nasdaq technical levels of interest:

Resistance Levels

• intermediate resistance 25,700 to 25,850
• Multi-Week Highs 25,833 Recent Double Top
• All-time high resistance zone 26,100 to 26,300
• Current ATH 26,283 (CFD)

Support Levels

• 25,500 Triangle formation highs (broken)
• Pivot 25,500 +/- 75 pts
• Pivot now Support 25,000 to 25,250
• 24,500 Main support
• Early 2025 ATH at 22,000 to 22,229 Support

S&P 500 4H Chart – Mixed but Holding Tight

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S&P 500 (CFD) 4H Chart – January 8, 2026 – Source: TradingView

The S&P 500 has reached new all-time highs just yestedray and holding right around its recent 6,973 record.

Similarly as the Dow, it remains strong above its 50-period Moving Average (6,913) and will stay bullish as long as it remains above.

Still, the most bullish case would require a clear push beyond the current highs, leaving for now a more mixed technical outlook ahead of NFP.

S&P 500 technical levels of interest:

Resistance Levels

• ATH Resistance 6,945 to 6,975
• Current All-Time High 6,973
• 1.382% Fib-Extension potential resistance at 7,001

Support Levels

• 6,913 4H 50-MA Support
• 6,800 Psychological Pivot and Range lows
• Support 6,720 to 6,750 and 8H MA 50
• 6,400 Major psychological support

Safe Trades and Good Luck for tomorrow's NFP!

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