S&P 500 (SPX) – Mildly bullish but correction risk is rising
The S&P 500 pushed higher into late Q3 but was rejected at channel resistance. Short-term, the index is leaning corrective, though the anchored VWAP from summer lows is still acting as support.
Why we’re mildly bullish:
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U.S. growth has slowed, but AI investment and services demand are still carrying the economy.
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Fed easing is in motion, and markets now expect more cuts into 2026 — this supports valuations.
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Earnings have been modest but consistent, with breadth slightly improving beyond mega-caps.
What can flip this into a correction:
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Sticky services inflation that forces the Fed to stay cautious.
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Higher yields at the long end pressuring multiples.
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Margins squeezed by wages, tariffs, and energy.
Levels to watch:
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Support: 6,200 (anchored VWAP + 200-day). Break here = deeper correction.
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Resistance: A clean break back above 6,700 reopens upside momentum possibly up to 7,200..
NASDAQ-100 (NDX) – AI still driving the tape
The NASDAQ has been the clear leader in 2025. After a strong run, it’s now consolidating, pulling back toward 24,000 support, which aligns with the anchored VWAP.
Why we think it can bounce:
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AI spending is real — corporates continue to pour capital into AI infrastructure, directly supporting GDP and tech earnings.
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Unlike other indices, returns here are earnings-led, not just valuation-driven.
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The tech sector has shown resilience in every earnings season this year.
Risks to this view:
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If 22,800 breaks, downside opens to a deeper correction, possibly to anchored VWAP.
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Over-concentration in mega-cap tech means any earnings miss could weigh heavily.
Levels to watch:
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Support: 22,800 (anchored VWAP + shaded zone).
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Resistance: Breakout above 24,600 reopens a run into year-end highs.
Dow Jones Industrial Average (DJI) – In correction mode
The Dow lagged Q3, reflecting its heavier weight in industrials, energy, and financials. It has now broken below its rising channel, pointing to a short-term correction.
Why we’re cautious here:
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The Dow is more cyclical and trade-sensitive. Tariffs, a strong USD, and slowing global demand are clear risks.
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Long-end yields weigh more on these sectors than on tech.
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Earnings growth is modest, with less AI uplift compared to SPX/NDX.
Levels to watch:
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Support: 45,000 (anchored VWAP + round number support). Below that, 43,000 anchored VWAP support is next.
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Resistance: Needs to reclaim 46,200 to stabilise the structure.
View: Short-term correction likely into 45,000, where buyers may step back in.
Germany: DAX – Flag pattern defines Q4
The DAX is coiling inside a flag pattern. For now, price is supported by the anchored VWAP from April lows (~23,250). A breakdown here could accelerate the correction.
Why we’re neutral for now:
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Growth in Europe is stabilising but fragile, with PMIs mixed.
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The ECB has shifted to an easing bias, but can’t move aggressively with inflation still above target.
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DAX earnings remain tied to autos, chemicals, and industrials, all sensitive to China demand and energy costs.
Risks:
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Energy shocks (gas or oil) into winter.
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Stronger EUR, hurting exporters.
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China demand rolling over.
Levels to watch:
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Support: 23,250 anchored VWAP — a break risks downside toward 20,800.
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Resistance: Breakout above 24,000–24,200 would confirm a bullish flag resolution into possibly 26,500..
United Kingdom: FTSE 100 – Topping risk is building
The FTSE 100 is trading near 9,250, consolidating after a strong run from April lows. But the chart is showing signs of topping, and momentum is fading.
Why correction risk is rising:
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Inflation is stickier in the UK than elsewhere, forcing the BoE to stay cautious.
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UK households face real income pressure from mortgages and wages, which drags on consumption.
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Fiscal space is limited ahead of the Autumn Statement.
But here’s what could keep it supported:
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Energy & commodities: As long as oil and metals stay firm, miners and energy majors support earnings.
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Dividend yield: The FTSE’s yield premium over U.S./Europe keeps attracting flows.
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Defensives: Staples and healthcare cushion downside in risk-off phases.
Levels to watch:
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Resistance: 9,300–9,350 – if breaks we can see price travel to 10,000.
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Support: 8,900 (prior breakout zone) — if this breaks, a correction into 8,500 is likely.
Cross-market takeaways for Q4
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U.S. remains leader (NDX > SPX > Dow) thanks to AI and earnings strength.
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Europe is range-bound, with DAX at risk of breakdown if energy shocks hit.
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FTSE looks heavy — dividend yield and commodities help, but topping risk is clear.
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Rates and USD remain the big swing factors: higher yields or stronger dollar could weigh on all non-tech indices.