StoneX Self-Directed Analyst Article

The tech selling continued on Wall Street first thing today after the cash markets re-opened. But we saw some gains in a few other sectors including financials, energy names and telecoms, suggesting rotation remained the order of the day. Hence, the loses in the Dow was relatively limited compared to the tech-heavy indices like the Nasdaq 100 or the S&P 500. As the overall macro backdrop is still positive for US and global stocks, we maintain a positive Dow Jones forecast and foresee a breakout above the key 45K resistance area.

 

DJIA stocks performing well today

 

Among the best gainers, DOW was up 2.6% at the top of the leader board, followed by Travelers. Consumer names like Coca Cola, McDonalds and Wall Mart also found themselves with gains of around 1% each. Unsurprisingly, Intel, Apple and Microsoft were the top losers on the Dow today.

 

Today's stock market heatmap reveals a pronounced downturn in the technology sector, with major names such as Nvidia (NVDA) and Broadcom (AVGO) experiencing significant losses, dropping 2.97% and 3.12% respectively. This descent reflects growing bearish sentiment within the semiconductor industry, potentially raising concerns about broader tech reliability.

 

Markets awaiting direction from Powell

 

While tech stocks have fallen a bit this week, they still remain strong when compared to a few months ago. For some investors, profit-taking has taken precedence over continued risk taking, amid concerns about valuations becoming stretched.  Still, the downside is likely to be limited even for tech names, thanks to growing expectations that the Fed Chair will signal a clear shift in policy on Friday. But whether the tech sector will break to new highs on the back of Powell’s comments remains to be seen. In any case, global central banks are easing policy, and this is keeping the global stock markets supported. Hence, we are seeing record after record for global stock averages. Today it was the FTSE 100's turn, despite a hotter UK CPI print this morning.

 

Technical Dow Jones forecast: DJIA gearing up for a clean breakout?

 

 

The 45,000 level has been tested multiple times since November 2024 on the Dow Jones chart, and this level has held as resistance every single time. Most recently, it was Friday when it finally looked like the bulls were given the all-clear. But the index turned lower to close below that hurdle and again frustrated the bulls. So far, though, the downside has been limited on this latest failed breakout attempt. This suggests that the index is still gearing up for a potential breakout. Short-term support at 44,750 has held so far this week. Below here, 44,500 and then 44,300 are the next key short-term support levels.

 

 

Even if we see renewed weakness here, so long as the long-term support in the range between 42,800 to 43,150 holds, the path of least resistance would still remain to the upside in so far as the slightly longer-term Dow Jones forecast is concerned. Here, we also have the 200-day average residing.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R