Nasdaq 100, S&P 500, Dow Jones Outlook: Has The Dead Cat Bounced?

The revival of Trump’s trade war shook sentiment on Friday, resulting in the worst day for Wall Street indices in six months. The S&P 500, Nasdaq 100, and Dow Jones all fell sharply just a day after reaching fresh record highs.

In typical shell-shocked fashion, Wall Street indices have since entered choppy trading conditions within the lower half of Friday’s sell-off, though prices have been drifting higher in a corrective manner. Specifically, markets appear to be in the midst of a dead cat bounce, and with momentum turning lower once more, I’m now on guard for another leg down.

View related analysis:

Wall Street Indices: Are Rebounds Just Dead Cats Bouncing?

Chart analysis by Matt Simpson, Source: TradingView, CME, CBOT

A dead cat bounce is a short-lived rebound in prices during a broader downtrend. It occurs when a heavily sold market — such as a stock index, currency, or commodity — briefly rallies before resuming its decline. The move is typically driven by short covering, bargain hunting, or temporary optimism rather than a genuine shift in fundamentals or sentiment.

Nasdaq 100 Futures (NQ1!) Technical Analysis

The daily chart shows the Nasdaq correction has entered its fourth day, with prices gapping lower beneath the 20-day EMA. A bearish doji formed on Thursday, signalling waning bullish momentum, while a bearish RSI(14) divergence appeared ahead of last Friday’s sell-off.

The 1-hour chart shows a swing high beneath a weekly VPOC (25,218), with prices now trading below the 200-bar EMA and high-volume node (HVN) of the four-day correction. Bears could look to fade into moves within Thursday’s range, initially targeting the monthly pivot point at 24,400. A break beneath this level brings the 24,000 handle into focus, near the 100% projection level.

Chart analysis by Matt Simpson, Source: TradingView, CME Futures, NASDAQ 100 E-mini Futures

S&P 500 Futures (ES) Technical Analysis

The S&P 500’s daily price action mirrors that of the Nasdaq 100 and Dow Jones, with the 1-hour chart showing a lower high ahead of a break below the 200-bar EMA. Prices are now testing the monthly pivot point, suggesting sellers remain in control.

Bears could look to fade rallies within Thursday’s range, anticipating a sustained break beneath the pivot. Momentum currently shows little appetite for a recovery bounce, reinforcing the downside bias.

The monthly S1 support sits near the 6,540 low, offering a logical initial target for S&P 500 bears.

Chart analysis by Matt Simpson, Source: TradingView, CME Futures, S&P 500 E-mini Futures

Dow Jones Futures (YM) Technical Analysis

The daily chart shows the Dow Jones forming a doji near the 2024 high before momentum turned lower. Thursday’s bearish engulfing candle completed an evening star reversal pattern, signalling fading bullish strength. While prices are still holding above the 50-day EMA, the bias favours a break beneath it in the coming sessions.

The 1-hour chart reveals a head-and-shoulders top preceding the recent sell-off, with prices now trading below the monthly pivot point. Bears may look to fade rallies towards the pivot, targeting the monthly S1 at 45,670 and the 45,387 low, with a break below that exposing the 44,983 support area.

Chart analysis by Matt Simpson, Source: TradingView, CBOT Futures, Dow Jones E-mini Futures

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.