Stock Markets attempt rally after overnight War tumble, Oil back to $100 – US Index Outlook

• US Stock Benchmarks have significantly gapped lower from weekend angst but are attempting a rebound
• Participants are now pricing a prolonged US-Israel-Iran war and more disruptive effects from the conflict.
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

The US-Iran-Israel war is into its second week, and bombardments all over the Middle East are continuing ceaselessly, despite marked progress in the number of drones and ballistic missiles launched by Iran.

Numerous neighboring countries have now seen a faster pace of retaliation, including Azerbaijan and Turkey. Iran is escalating its responses against Gulf countries, multiplying attacks on Oil facilities in Bahrain, Kuwait, Qatar, and the UAE, which has brought a historic move in the commodity.

Black Gold gapped from $92 to $103 at the Globex open and quickly bounced toward $120 as thin volume and heavy buying inflows triggered a fresh squeeze.

The overnight spike to 4-year highs came with significant angst, as global assets sagged from continued stagflation pricing, with safe-haven assets like Gold and US Treasuries also taking significant hits.

S&P 500 futures were down 165 points at one point, the largest drop since October 2025 – and this is not such a common move!

Luckily, the Market-shaking rise did not extend further. Oil is now down 19% from its highs! (but remains about 5% above its Friday close)

The reversal brought a flurry of dip-buying across all assets, which initially suffered from the futures session's movements.

US Equities are now looking to fill their wide overnight gaps in an impressive rebound.

However, some doubts remain: Stagflation fears could get extended as long as Oil remains above $85 per barrel; as the War extends and is now projected to last about five more weeks, the prolonged expectations add to further concerns of a more.

Iran hasn't shown signs of de-escalation, having also named Ali Khamenei's successor, his son Mojtaba Khamenei.

The US and Israel also won't stop until "unconditional surrender", hence, tracking their progress against IRGC targets is key to attempting to time a resolution to the conflict.

The Strait of Hormuz de facto closure remains the key inflexion point, so traders should watch its traffic (or lack thereof) closely.

Let's spot where the ongoing rebound could take the action 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.

Read More:

• Markets Today: Brent crude futures surge 14%, STOXX 600 hits two-month lows as FTSE 100 approaches 10000 psychological level
• Chart alert: WTI crude oil key short-term support at $102.25 for another 20% rally
• Markets Weekly Outlook - Geopolitics Overpower Fundamentals: The $150 oil warning and the rate cut dilemma

The current sessions' Market picture is not an easy one to understand – The largest cap stocks are all broadly unchanged in today's session, resisting the overnight chaotic drop.

Traditional and Defensive equities are the largest victims of the drops however, with none of such sectors withstanding the pressure except for a few Healthcare and Producer Manufacturing names.

Broadcom is on the other hand pulling the semiconductors sector to a bullish tilt, with Tech in general marking its own rebound since the beginning of the War, as such sectors tend to get less impacted by rising energy prices and supply shocks.

Dow Jones saw a spectacular move in the past few trading sessions, notably breaking the significant 47,000 Support level during thin-volume futures trading.

Attempting a rally back above the Psychological level, a very symbolic test will now be playing out and affecting the upcoming outlook for the Stock Market:

• Retesting the 47,000 Support, bulls will want to extend above 47,200 to add hopes of a further rebound
  • Imminent trading is to be monitored as the Friday lows gap has now been filled
  • Extending a rebound above 47,300 will be necessary to confirm a more decisive rebound.
• Rejecting current levels could easily open the door towards 46,000.
  • Any break of this key level would point to August highs 45,715.
  • Below this, there is no support until January ATH at 45,283

Dow Jones technical levels for trading:

Resistance Levels

• 47,300 Friday close
• Friday Pivot 47,500 to 47,650 (bullish above)
• Pivotal Resistance at 48,000
• November ATH 48,300 to 48,500 Support and Channel highs
• Index All-Time highs 50,512

Support Levels

• Key Support 47,000 to 47,200 (testing – Bearish below!!!)
• Overnight futures drop Mini-Support 46,300
• 46,000 +/- 100 pts November Support
• August highs 45,715
• 45,000 psychological level (Main Support on higher timeframe)

I hope that some traders were able to catch the Tweezer top bearish formation signal from Friday's analysis!

For those who did not, an interesting level is imminently getting reached;

Despite the large bull candle from this morning, Nasdaq is facing a pivotal resistance at current levels with the overnight Gap fill reached (24,643).

• This provides a decent setup for short-entries, with the setup invalidated above the 4H 50-period MA at 24,850.
  • For those who prefer a tighter stop, look at the Mini-intraday Pivot around 24,750
    • 200 point stops are relatively large, hence, manage size accordingly.

Nasdaq technical levels of interest:

Resistance Levels

• Gap fill – Imminent resistance 24,643
• Mini-intraday Pivot 24,750
• 4H 50-period MA 24,850
• Key Resistance 25,000 to 25,170 (mini range highs)
• 25,400 to 25,500 Key intraday resistance

Support Levels

• October and Overnight lows 23,972
• 24,400 to 25,600 Key Support
• February Support 24,150 to 24,300
• October - November Support 23,800 to 24,000
• Early 2025 ATH at 22,000 to 22,229 Support

The S&P 500 has officially broken its double bottom throughout the overnight trading and as warned on Friday, it marked a bearish break lower to test the 6,579 lows.

Also coming back to test its Friday lows gap fill (6,710), reactions here will be very key:

• Rejecting the current level would point to further downside ahead
  • A first stop could be expected at the overnight lows
  • Breaking below opens the door to 6,500 – October lows
    • Any close above 6,750 would invalidate the bearish setup.

S&P 500 technical levels of interest:

Resistance Levels

• 6,710 Imminent Gap fill
• Bull/Bear Momentum Pivot 6,730 to 6,750
• 6,770 to 6,800 Major Resistance
• Previous ATH Resistance 6,945 to 6,975

Support Levels

• 6,680 to 6,700 Minor Support (Gap fill! – bearish below)
• Overnight lows 6,579
• 6,490 to 6,512 October lows Immediate Support
• 6,400 Major psychological support

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

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