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By Elior Manier
US indexes demonstrated surprising resilience in yesterday’s trading but ultimately could not withstand the global selling waves.
These market movements do not resemble a typical flight to safety, as even gold and US treasuries are falling off during today’s rally in the dollar and oil prices.
The petrodollar and its close counterpart, WTI, spiked to new cycle highs overnight, negatively impacting most global assets. We are now seeing the pricing in of slowed global trade, inflationary fears, and supply shocks in both the dollar and energy commodities.
War-related trades tend to unfold in phases as participants seek to identify which assets will be most affected. Currently, a flight to safety does not appear to be the prevailing sentiment, as the conflict is still expected to remain localized in the Middle East.
Still, it is surprising to observe traditional safe havens being rejected amid such geopolitical turmoil, but we are living in unprecedented times. Could this present an opportunity? For the moment, the harsh price movements do not support that idea.
What is certain is that stock markets do not have a bright outlook and may remain under pressure for the foreseeable future, particularly since supply shocks typically benefit specific stakeholders, like defense producers and energy stocks, rather than the broader market.
Increased traffic slowdowns in the Strait of Hormuz could hinder economic activity in the coming weeks. Let’s see how the geopolitical situation affects current flows by diving into today’s mid-session charts and key trading levels for the major US indexes: the Dow Jones, Nasdaq, and S&P 500.
Current Session’s Stock Heatmap
The stock market outlook is bleak. It’s a general selloff around all sectors, with only software and information technology rebounding in today’s session. These sectors would generally be isolated from war flows. They could actually benefit from increased information flows and the need for tech, as modern warfare involves such sectors more than ever.
Dow Jones 2H Chart and Trading Levels
As suggested in our past-day market analysis, sellers entered at the gap-fill level back towards the 47,500 support (+/- 100 points). The action is now forming a clear downward channel, with buyers mean-reverting back towards the 48,000 pivot zone, supported by a pullback in oil prices.
The 48,400 to 48,500 resistance zone will act as a major test ahead. Coming in at the upper bound of the channel, rejecting it could lead to a drop back to 47,000.
Dow Jones technical levels for trading:
Resistance Levels
* November ATH 48,300 to 48,500 key resistance
* Mini resistance 48,660 to 48,740 (Friday lows)
* 49,000 gap fill and key psychological resistance
* Index All-time highs: 50,512
Support Levels
* Psychological pivot at 48,000 (weak support – watch if close above or below)
* Morning lows: 47,605
* August support: 47,500 to 47,650 (morning bounce)
* 47,000 next main support
* 45,000 psychological level (main support on higher timeframe)
Nasdaq 2H Chart and Trading Levels
Nasdaq is remaining surprisingly resilient compared to the Dow. The 24,500 support zone acted as significant support. Still, the index evolves within a large downward channel and is currently testing its mid-level.
Rejecting here would be a bearish sign, and the move would accelerate further if prices break the morning lows (24,300). The next support would be found at October lows (23,800 to 24,000).
Nasdaq technical levels of interest:
Resistance Levels
* Morning highs and immediate test: 24,615 (watch for rejection)
* Mini-intraday pivot: 24,750
* Channel highs: 24,900
* Key resistance: 25,000
Support Levels
* 24,400 to 25,600 key support (range support)
* February support 24,150 to 24,300 – morning lows
* 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 S&P 500 is now holding below its significant 6,800 area. Attempting a mean-reversion bounce, this psychological level provides a major level for momentum ahead:
* Closing above 6,800 on the session could help for a wider rebound to at least 6,840.
* However, rejecting it could open the door for 6,680.
S&P 500 technical levels of interest:
Resistance Levels
* 6,770 to 6,800 psychological pivot
* Mini resistance 6,820 to 6,840
* 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
* February support 6,720 to 6,750
* Morning lows: 6,710
* February lows 6,710 to 6,730 (morning lows)
* 6,680 to 6,700 next support
* 6,400 major psychological support
Safe trades, and keep a close eye on the US-Iran developments!
Original Post
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Traditional safe havens like gold and US Treasuries are underperforming, with both declining despite heightened geopolitical risks and a rally in the dollar and oil.
Software and information technology sectors are rebounding and demonstrating resilience, likely benefiting from increased information flows and their role in modern warfare.
The S&P 500 must reclaim 6,800 for a potential rebound to 6,840; failure could trigger a decline toward the 6,680-6,700 support zone.
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