Stocks rally to top of their ranges ahead of FOMC – Dow Jones and US Stocks Outlook

• Stock Markets rally as no geopolitical surprise occurred over the weekend
• US Indexes are consolidating as traders are awaiting for FOMC to push for a new direction
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

The week has just begun, and traders are already pushing global markets across all asset classes – without any economic data releases.

Gold reached $5,000 during the Asia session, and Silver is up 10% to $111; metals are not showing any signs of stalling in their relentless rallies.

Monday marks yet another discrepancy in investor sentiment:

Stocks are rallying from last week's earnings, the unwinding of weekend risk positioning, and pre-FOMC trading, while cryptocurrencies keep seeing outflows.

Bitcoin holds at $87,000, but most other altcoins are struggling to gather momentum.

With the latest announcements of a "massive armada" massing in the Middle East, volatility is expected to remain elevated, and economists remain on edge – Oil dazzled in up-and-down trading, but its contained action shows this isn't the primary concern for traders – at least for now!

A surprising move in other asset classes has been the rebound in the longer-end of the Bond curve – After a disastrous performance last week, the 30Y Bond is bouncing higher (Yields down), supported by better-looking Japanese yields (their bond market has been breaking lower for a while).

Lower yields are showing support to stocks around this phase in Markets – Stocks have reacted negatively to higher yields from the US uncertainty.

Participants are also anxiously awaiting the announcement of the next Fed Chair, which should come before the end of January (i.e., this week!).

Overall, with the US Dollar thrashing lower (an in-depth analysis will be coming up this afternoon), the theme for this week's start is one of caution:

Key Mag 7 earnings, geopolitics, and the FOMC are not risks to underestimate.

With only tomorrow's ADP weekly report, Wall Street will keep a close eye on geopolitical risks and earnings, including Apple, Meta, Microsoft, ASML, and Tesla, in between key Blue Chip Stocks reports (Visa, Mastercard, GM, AT&T, IBM, and more).

Magnificent 7s and Semiconductors are doing the heavy-lifting in today's sessions. Microsoft (MSFT) is leading its peers to the upside, while Defensives and Financials drag lower as their earnings season is now complete for the most-part.

Dive into our daily session charts and trading levels for the major US Indexes: Dow Jones, Nasdaq, and S&P 500 – Watch for weekend volatility as the situation is not fully clear yet and Iran remains a factor.

Read More:

• Markets Today: Gold Breaches $5100/oz, Yen Intervention Risks Grow, Dollar Slides. USD/JPY Test 100-Day MA
• FOMC Meeting Preview: Fed To Keep Rates on Hold, Implications for the DXY and Gold
• Get ready for an agitated FOMC Week – Markets Weekly Outlook

The DJIA is now rallying within a tighter range (48,600 to 49,600) as investors await for FOMC communications – Today's rebounding action got contained at 49,400 highs (Keep this level in check for the week).

As risk-sentiment stays contained from the high-potential risk, expect further consolidation in the upcoming 48 hours (FOMC is on Wednesday at 14:00).

This view is reflected by the RSI tilting higher but not taking a significant bullish shape and the up-and-down trend lines forming a triangle formation.

The main risk for this week remains a US Intervention in Iran which could provide a sudden risk-off move which would happen in a flash, so it could be wise to prepare accordingly in case – Any heavy volume close below the past week lows (48,339) would be the confirming sign.

Dow Jones technical levels for trading:

Resistance Levels

• Morning highs 49,391
• Friday highs 49,663
• Short Timeframe resistance 49,200 to 49,300 (immediate rejection)
• 49,650 to 49,670 Current ATH Resistance
• All-time Highs 49,710
• 50,000 Potential Psychological Resistance

Support Levels

• Christmas ATH High Timeframe Momentum Pivot – 49,000 and Triangle lows
• Intraday support 48,600 to 48,700 (4H 200-period MA)
• Psychological Support and range lows at 48,000
• 45,000 psychological level (Main Support on higher timeframe)

Nasdaq is now showing very decent strength as investors rush to position for strong Q4 Earnings from Mag 7s and Tech giants.

Panic from October overvaluation themes had seen names like Nvidia, Microsoft and Meta struggling harshm but the immediate action is looking much better.

The Tech-Heavy index is now attempting to complete its past week measured move to retest its all-time highs.

Any close above 25,833 would confirm the push to higher levels.

Don't forget that Nasdaq would also get severely hit from risk-aversion in the event of an Iran attack.

Nasdaq technical levels of interest:

Resistance Levels

• Session Highs 25,817 (testing range highs)
• Intermediate Resistance 25,700 to 25,850
• Measured move target 26,050
• All-time high resistance zone 26,100 to 26,300
• Current ATH 26,182

Support Levels

• Momentum Pivot 25,200 to 25,500 +/- 75 pts
• session lows 25,503
• Wednesday lows 24,913
• 24,500 Main support
• Early 2025 ATH at 22,000 to 22,229 Support

The Spoose is also showing similar measured-move patterns which should materialize if the FOMC doesn't get too hawkish (current tone is neutral/cautious hence more dovish).

In the event where the Iran situation tones down or takes a better direction, stocks could easily get launched to some new highs – The measured move points to at least 7,020.

Depending on sentiment, the Index could get further with Fibonacci projections hanging between 7,060 to 7,130.

A reminder that hawkish communications from the Fed ("we need to keep rates as they are", etc) would hurt sentiment.

The reverse applies for dovish communications ("further rate cuts can be expected through the cycle", a bigger emphasis on the labor market,...)

S&P 500 technical levels of interest:

Resistance Levels

• Session highs 6,962 and counting
• Previous ATH Resistance 6,945 to 6,975
• Current ATH Resistance at 7,000

Support Levels

• Pivot Zone 6,880 to 6,900
• Mini-Support 6,830 to 6,850 (Past day support)
• 6,800 Psychological Support
• 6,789 session lows
• Support 6,720 to 6,750 (Mid-December lows at 6,729)
• 6,400 Major psychological support

Safe Trades and a successful FOMC Week!

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