US Stocks fall from Warsh's nomination – Month-End flows and US Index Outlook

• Stock Markets keep correcting after FOMC highs after Kevin Warsh's nomination for Fed Chair
• US Indexes test lower levels as Month-end flows prepare
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

Global markets received a shocker this morning with the announcement of the next Federal Reserve leader.

Kevin Warsh has been tapped to replace Jerome Powell when his term concludes in May.

The news triggered a huge reactions around Markets.

Metals, historically strong in January, were hammered by a combination of post-FOMC adjustments and month-end flows.

Extreme leverage and positioning did what it does best when the trend reverses, it creates a cascade of panic across all asset classes.

US stocks were caught in the stray.

All major indexes are trading lower as a beta-reducing wave sweeps through the market, with the Nasdaq and Russell 2000 leading the decline.

Interestingly, this weakness is isolated to the US, as global equity markets actually rose during today's session – This really confirms the impact of the Fed Announcement.

As forced liquidations risk triggering further market instability, traders should prepare for rough conditions ahead.

With month-end flows colliding with the weekly close and lingering anxiety over Iran, the market mood is decidedly timid as the weekend approaches – Keep your eyes wide open!

Today's picture is not a pretty one, with almost everything down except Consumer Defensives, led by Verizon after huge earnings and strong projections, and Tesla, the best performer among Megacaps.

Dive into our daily session charts and pre-FOMC trading levels for the major US Indexes: Dow Jones, Nasdaq, and S&P 500.

Read More:

• Silver down 30%! – Chaos in the Metals Market
• The Fed Chair has been picked: Who is Kevin Warsh?
• Will the RBA Opt for a Rapid Policy Reversal?

The Dow Jones is now evolving within a descending Channel right after testing its all-time highs – Not such a worrying sign as prices remain close to the recent records but watch out as cracks emerge.

Still, the late afternoon rebound is helping the outlook for the Index which points to a more rangebound action ahead (discarding any black swan events).

Keep these two levels closely for next week:

• Above 49,100, the price action is clear and points toward a pursued run to at least a test of the all-time highs
• Below 48,400 however, further downside is to be expected around 47,500

Dow Jones technical levels for trading:

Resistance Levels

• Christmas ATH Daily Mom. Pivot – 49,000 to 49,100
• Resistance 49,200 to 49,300
• ATH Resistance From 49,500 to 49,700
• All-time Highs 49,710
• 50,000 Potential Psychological Resistance

Support Levels

• Intraday Pivot 48,600 to 48,700
• 48,487 Session lows
• Key Support around 47,500
• 45,000 psychological level (Main Support on higher timeframe)

Nasdaq did not get such a positive treatment from dip-buyers.

The Tech-Heavy index is testing its 25,200 mini-support. Except for a rebounding investor sentiment or more positive global news, the Index looks poised for a drop towards 24,500.

Keep a close look at the Monday open – Buying on Monday would help the situation, watch out what happens if dip-buyers don't show up!

Nasdaq technical levels of interest:

Resistance Levels

• Session Highs 25,840
• Intermediate Resistance 25,700 to 25,850
• 26,246 FOMC highs
• All-time high resistance zone 26,100 to 26,300

Support Levels

• Mini-support 25,200 to 25,500 +/- 75 pts
• session lows 25,470
• Wednesday lows 24,913
• 24,500 Main support
• Early 2025 ATH at 22,000 to 22,229 Support

The S&P 500 is looking more robust than its peers, particularly as it rebounded close to its session highs ahead of today's close (6,969).

Similarly as Nasdaq and Dow Jones however, it will have to breach back above its Pivot zone to clear bearish factors (6,975) – rejecting the current levels could bring more consistent outflows.

S&P 500 technical levels of interest:

Resistance Levels

• Previous ATH Resistance now Pivot 6,945 to 6,975
• Current ATH 7,020
• All-time High Resistance 7,000 to 7,020 (testing)
• Potential Breakout targets (Fibinacci-Extensions)
  • 1.362 = 7,080
  • 1.618 = 7,119

Support Levels

• 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 sentiment on Monday!

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