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

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.