Stocks get slammed again after a hopeful rebound

Yesterday's session offered quite a positive rewind after what had been a rough start to the month.

The powerful uptrends are still technically dominant in the global stocks' impressive yearly explosion, but ever since their first appearance at the big surprise in the August NFP, it seems that sellers are trying to make a decisive appearance again.

The underlying technical background for equities has largely stayed positive: strong fundamental value underpinned by roughly 80% of reporting US firms showing growth, combined with a projected dovish path from the Fed while the economy stands solid, had fueled exactly what the bulls needed to close last month at new highs.

But the relentless march to consistent new record levels keeps raising the same critical question: Are stock valuations simply too high now?

Stock Markets are closing today's session at their lows and at key inflexion points for future action.

The Federal Reserve's most recent not-so-dovish return—delivered during what was still technically a rate cut—appears to have finally started to scare highly leveraged participants. In response, traders are now aggressively taking profit on this uncertainty.

Some analysts also warn of a rally lacking breadth (leaders bring the market up while the others lag), AI and financial leaders are issuing public warnings and there are even mentions of an Hindenburg Omen (although the accuracy of such signal has reduced as of late).

One thing is for sure: Volatility is going to stay elevated, and this is generally a good thing for traders! (Less for investors)

Let's have a closer look at intraday charts for all major stock indices: the Dow Jones, Nasdaq, and S&P 500, to gauge the immediate momentum.

Read More:

• Bitcoin holds above $100,000, but for how long?
• USD/JPY hits resistance: Bearish signal warns of a potential top
• BoE Hold Rates Steady in Close 5-4 Vote Split, GBP/USD Continues Rally

Our past-day analysis looked at the mini-trendline which needed to hold for bullish prospects.

But the Dow could not hold the wave of profit-taking which took the index to retest the September 23 previous record (46,794 on the CFD – 46,714 on the actual Index).

A close below this key level may bring further continuation, as the RSI momentum consistently grinds lower.

On the brighter side, staying above the 45,000 level – Key for a Market barometer – maintains the higher timeframe bullish picture.

Dow Jones technical levels of interest:

Resistance Levels

• Current All-time high 48,090
• 4H MA 50 and resistance at 47,500
• ATH Resistance Zone 47,900 to 48,100
• post-FOMC highs resistance zone around 46,400 (immediately testing)

Support Levels

• Short timeframe pivot 47,000 to 47,200
• 46,400 major support
• 46,000 higher timeframe Pivot now support
• 45,000 psychological level
• 44,400 to 44,500

The current 4% correction from the 26,200 All-time Highs is evolving in a small downward channel which contains both buying and selling within.

Sellers are now reaching the lower bound of the May upward channel, a key high timeframe technical aspect to keep an eye on.

A rebound here (around 25,000) may be bringing some dip-buying opportunities, however, a break and close below could also bring more selling (as higher timeframes show overbought signs).

Nasdaq technical levels of interest:

Resistance Levels

• Current ATH 26,283 (CFD)
• All-time high resistance zone 26,100 to 26,300
• Intermediate resistance and 4H MA 50 25,700 to 25,850
• Mini-resistance at 25,400 Gap and MA 200
• Session highs 25,730 and MA 50

Support Levels

• Current Pivot 25,050 to 25,200 (Tuesday lows 25,186)
• 24,500 intermediate support
• October lows 23,997
• Early 2025 ATH at 22,000 to 22,229 Support
• Session Lows 25,110

Down close to 1% on the session as we speak, the index representing the 500 best US firms is not resisting to the pressure.

Yesterday's analysis indentified a topline that acted as fuel for profit-taking with the confluence of the 50-period Moving average (6,811).

Watch the psychological, round levels:

A weekly close above 6,800 should act as a positive levy for continuation.

Else, below 6,700, a larger pullback could be starting.

S&P 500 technical levels of interest:

Resistance Levels

• 6,930 (current All Time-Highs)
• ATH Resistance 6,900 to 6,930
• Intermediate resistance 6,830 to 6,855
• Daily highs 6,796

Support Levels

• 6,707 session lows
• Pivot and MA 200 6,720 to 6,750 (testing)
• 6,680 to 6,700 support
• 6,570 to 6,600 Key support
• 6,490 to 6,512 Previous ATH now Support (4H MA 200 Confluence)

PS: The Fear and Greed Index indicates Extreme fear, but with prices less than 5% from all-time highs, it doesn't look like things are quite there yet.

Safe Trades!

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