US markets consolidate amid AI disruption and trade war concerns
US markets face headwinds from Chinese AI disruption, trade tensions, and monetary policy uncertainty. Still, the Dow Jones, Nasdaq, and S&P 500 stay in long-term uptrends while entering a consolidation phase near all-time highs.
As US equity markets digest corporate earnings, the trade war narrative, inflation, the outlook for monetary policy and the disruption threat of more cost effective Chinese AI (DeepSeek), major indices have now moved into a consolidation phase.
Dow Jones (Wall Street): The Blue-Chip Safe Haven
Comprised of 30 blue-chip companies, the Dow Jones represents stability and established industry leaders. It appeals to investors seeking a more conservative approach, providing a haven amidst market uncertainty.
Currently the index, while not far off all-time high territory currently trades within a short to medium term consolidation between levels 41700 and 45100. The long term trend for the index remains up and as such trend followers might prefer to keep a long bias to trades on the index for the time being.
Long entry might be considered on a bullish price reversal closer to one of the labelled levels of support on the chart above, or on a close above resistance at 45100. Overhead trendline resistance at 46630 provides a longer term upside target for the index. Only on a break (close) below the major low at 41700 would our long only bias to trades on the index be reconsidered.
Nasdaq (US Tech): High-Growth, High-Risk
The Nasdaq, known for its heavy concentration in technology and growth stocks, presents a more volatile but potentially higher-reward scenario. While attractive to investors seeking dynamic growth, the Nasdaq faces challenges. Concerns about inflated valuations and potential competition from emerging AI players like DeepSeek AI, a Chinese startup whose advanced AI models are disrupting the market, have cast a shadow over the tech-heavy index.
The index also trades near all-time high territory although is currently in a short to medium term consolidation between levels 20755 and 22135. The long term trend for the index remains up and as such trend followers might prefer to keep a long bias to trades on the index for the time being.
Long entry might be considered on a bullish price reversal closer to one of the labelled levels of support on the chart above, or on a close above resistance at 22135. Overhead trendline resistance at 23230 provides a longer term upside target for the index. Only on a break (close) below the 200 day simple moving average (blue line) would our long only bias to trades on the index be reconsidered.
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