Major rotation flows and drops – Dow Jones and US Index Outlook

• Stock Benchmarks diverge strongly in this morning's Market action
• US Equity flows turn to traditional sectors after years of Tech outperformance
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

Yesterday’s Manufacturing PMI beat (52.6 vs. 48.5 expected) has brought traditional and defensive sectors back into the spotlight for equity investors.

After a volatile January, traders are still searching for the dominant trend heading into 2026.

So far, only one theme stands out: global divergence and increasingly concentrated trends.

Passive investing is a strategy of the past.

For nearly 15 years, buying almost anything — especially technology — was a winning strategy. Tech has outperformed all major indices since the 2000s, a trend reinforced by today’s consumption patterns and the dominance of the Magnificent Seven.

However, with the AI narrative now largely priced in, equities are reacting less to earnings beats and more to longer-term macro and valuation themes.

One such development is the resilience of the global economy despite tariffs and recurring trade tensions.

In that context, the US continues to beat growth expectations, providing a strong demand backstop.

When highly valued areas of the market (AI and Tech) appear fairly priced while growth remains solid, capital naturally rotates toward more resilient, lower-beta sectors. Relative valuation and wealth effects begin to lift previously overlooked parts of the market.

That rotation is exactly what we are seeing today.

This does not look like rising risk aversion, but rather a deliberate rebalancing toward defensive and traditional equities — a theme that has been building since October 2025.

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 as profit-taking flows could confirm the broader range.

Read More:

• Silver (XAG/USD) Outlook: Selloff takes a break, but it is over?
• Bitcoin breaks $80,000! Altcoins suffer – BTC, ETH and SOL Outlook
• Oil prices down 6% as US-Iran de-escalation hopes cool market heat… Is it the end of the line for bulls?

As you can see, sectors the most closely related to tech are struggling, leaving space for the traditionals to outperform (Producer Manufacturing, Consumer Durables, ...)

Despite the very strong action in the morning, watch for the profit-taking at the highs which could maintain the broad rangebound picture (48,400 to 49,700).

Dow Jones technical levels for trading:

Resistance Levels

• Intraday Pivot 49,200 to 49,350
• 49,400 morning highs
• ATH Resistance From 49,600 to 49,700
• All-time Highs 49,710
• 50,000 Potential Psychological Resistance

Support Levels

• 4H 50-period MA 49,109
• Pivotal Support – 49,000 to 49,100 (Bull above, Bearish below)
• Intraday Support 48,600 to 48,700
• Key Support around 47,500
• 45,000 psychological level (Main Support on higher timeframe)

The picture in Nasdaq is looking quite ugly after failing to reach October all-time highs, suggesting the 24,500 to 25,800 range holds well.

Nasdaq technical levels of interest:

Resistance Levels

• Mid-range Pivot 25,200 to 25,500 +/- 75 pts
• Pivotal Resistance 25,700 to 25,850
• 26,246 FOMC highs
• All-time high resistance zone 26,100 to 26,300

Support Levels

• Minor Support 25,000 to 25,250
• Monday lows 25,084
• 24,500 Main support
• Early 2025 ATH at 22,000 to 22,229 Support

The range (6,800 to 7,000) is also holding strongly for the S&P 500 – Watch to reactions when prices reach the lower bound.

S&P 500 technical levels of interest:

Resistance Levels

• Previous ATH Resistance 6,945 to 6,975
• Current ATH 7,020
• All-time High Resistance 7,000 to 7,020

Support Levels

• Key Pivot 6,945 to 6,975
• Minor-Support 6,880 to 6,900
• Mini-Support 6,830 to 6,850 (Greenland lows)
• 6,800 Psychological Support
• 6,789 Greenland lows
• 6,400 Major psychological support

Safe Trades and keep an eye on headlines!

Follow Elior on Twitter/X for Additional Market News, interactions and Insights @EliorManier