Stocks explode despite War rumors, a bull trap? – Dow Jones and US Index Outlook

Ben Graham · February 18

US Stock Benchmarks exploded after forming a bottom in yesterday's trading
Nevertheless, geopolitical tensions could be emerging soon. Is this a trap?
Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

Markets are exploding higher in today's action, as was hinted by the rebounding action in Stock Benchmarks – Hope that some saw our previous day analysis to catch the move!

The morning bullish action is closely linked to rebounds in Mag 7s that have been performing roughly since the beginning of 2026, and to Financial Equities attempting to shine again after rolling in the deep.

Stocks explode despite War rumors, a bull trap? – Dow Jones and US Index Outlook - ExpertFX School — Magnificent 7 Stocks since beginning 2026 – Courtesy of BarChart

This shouts dip-buying as investors seek opportunities while overall sentiment cools – Traders are not forgetting the Warren Buffett adage: "Be fearful when others are greedy, and greedy when others are fearful."

However, in recent times, it's been tough to assess whether the Market is actually fearful.

Yes, the Tech sectors and anything related to AI are seeing bloodshed. However, Indexes are still very near all-time highs, and Asset Managers are still overtly positioned, as expressed in the recent Bank of America Survey.

The earnings season is a stellar one, so that would be a boon for Stocks, but as Markets are forward-looking, it is difficult not to show some skepticism about today's rebound.

Axios just published a piece that revives fear of an imminent war directed towards the Iranian regime, which keeps repressing its population amid the recent Revolts, where more than 30,000 victims have been reported.

To a large extent, war would definitely not help equities race towards new all-time highs.

Taking a step back, the Trump Administration is quite aggressive and opportunistic. So if there is an occasion for the US to trample one of its most opposing regimes at a time of weakness, it would be surprising to see nothing happening.

As I have been warning for a while now, this is a story to monitor for traders. Hence, traders would need to be careful about upcoming headlines, as the Second warship is expected to reach the Middle East soon.

So is today's rebound a bull trap? It could be early to say but this could offer a decent timing for risk-off opportunities.

In the meantime, 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

Dow Jones 4H Chart and Trading Levels

The Dow bounced sharply after forming a higher low yesterday.

However, the Index wicked at the 49,900 Resistance and is seeing rejection at its 4H 50 MA (49,850).

Hence, with the narrative potentially turning to a risk-off, current levels could offer very decent entry levels for bearish positions.

Any close above 50,000 would invalidate this thesis.

Dow Jones technical levels for trading:

Resistance Levels

49,900 to 50,000 Resistance (Session highs and rejection)
4H 50-MA 49,850
Intraday Resistance 50,250 (rejecting)
ATH resistance 50,400 to 50,500
Index All-Time highs 50,512

Support Levels

Major Support – 49,000 (breaking this should lead to further downside)
Past week Support 48,600 to 48,700
Key Support around 47,500
45,000 psychological level (Main Support on higher timeframe)

Nasdaq 4H Chart and Trading Levels

Now reaching the key 25,000, Nasdaq is at a very interesting technical point.

This level acted as resistance after the October 2025 crash and could act similarly if sentiment turns frothy.

Any break above 25,250 would void the setup, while a session close below 25,000 would confirm a downturn.

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 Key Support (bearish below)
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 4H Chart and Trading Levels

As mentioned in our previous day analysis, the S&P 500 went to retest its key 4H 50 and 200-period Moving Averages and looks to be rejecting them.

Reaching a 6,911 high this morning, profit-taking occured right ahead of the 200 MA which gives a first sign of weakness.

Rejecting below the Pivot Zone (closing below 6,900 on the session) should confirm the bearish turn. Any break back above 6,920 voids the bearish outlook.

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 (bearish below)
6,800 Psychological Support
Overnight lows 6,700 (range lows)
6,400 Major psychological support

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

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