US Market Recap and Potential Approaches: Dow's Range, Nasdaq's Surge & S&P's Resilience

Overview:

• Dow Jones: Stuck in a range-bound state below its all-time highs 
  • Trading below all-time highs in a range-bound state.
  • Discount levels present with no clear bullish follow-through.
• Nasdaq: Testing New Boundaries with Upside Potential 
  • Testing its ATH at 22,142.40 with strong bullish momentum.
  • Recovered quickly after an early drop; key reaction at the daily fair value gap.
• S&P 500: Continued Resilience and Upside Strength 
  • Demonstrating resilience with a bounce from its daily fair value gap.
  • Closing near 50% of yesterday’s move, suggesting limited bearish pressure.
  • Hourly charts hint at further gains if the bearish gap is overcome.

In today's market update, we take a closer look at three key US indices—the Dow Jones, Nasdaq, and S&P 500—and outline what traders should watch for in the near term. While the Dow remains range-bound below its all-time highs, the Nasdaq is testing new boundaries, and the S&P 500 continues to demonstrate solid upside strength.

Dow Jones: Range Bound Market

The Dow Jones is still hovering below its all-time levels, reflecting an overall cautious sentiment. Despite the lack of significant bullish follow-through, the market isn’t showing clear signs of a bearish breakout either. At present, the index is trading at a discount within its established range, suggesting that investors are waiting for a more decisive directional move.

Nasdaq: Testing the ATH-Level with Upside Potential

We are still strong on Nasdaq and currently testing the All-Time High 22142.40 level for upside potential.

We also have reacted bullishly on the Daily Fair Value Gap and we are looking for price to trade to and through the most recent high.

Dropped but Recovered

Yesterday started on a rocky note with a sharp drop in the US market. However, Nasdaq managed to recover within the first two hours of trading and is now testing a bearish fair value gap on the hourly chart. This recovery is critical, as it could signal renewed buying interest if the gap is successfully overcome.

Approach:

1. Bullish Scenario:

• Target: Price closing above the bearish fair value gap and trading through the high of yesterday’s opening candle.
• Implication: A strong confirmation of upward momentum and potential further gains.

1. For Bearish Scenario:

• Target: A breakdown below the 21,880.70 level, respecting the bearish fair value gap.
• Implication: Could signal further downside pressure, prompting a more cautious market approach.

S&P: Continued Upside Strength

The S&P 500 is showcasing continued strength after bouncing off its daily fair value gap. With a close at about 50% of yesterday’s move, the market suggests that bearish pressure isn’t dominant.

With the same approach with Nasdaq, as both are also correlated, the hourly chart reinforces the perspective, where a breakthrough of the bearish value gap could pave the way for additional gains.

Looking Ahead: Red Folder Next Week

As we look toward next week, several potential catalysts are emerging that could significantly impact the US market. While uncertainty persists, these key levels and fair value gaps will be critical in determining whether the bullish momentum continues or if we see a shift toward bearish sentiment.

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