A rebound could be coming for the Dow, but the charts show it may be short lived
Recent weakness in the equity market emphasizes the need to monitor charts closely for risk management. During corrections, we monitor key support levels and counter-trend indicators to help identify when the risk-reward profile of the market becomes more favorable. As of Friday’s close, the Dow Jones Industrial Average was off its all-time high by nearly 8% and sitting just above its 200-day moving average, which is support near 46,500. Short-term oversold conditions are in place for the first time since November, and a new signal from the DeMARK Indicators calls for a rebound this week. The 50-day moving average is initial resistance near 49,000, though a bounce of that magnitude appears unlikely before the correction regains its hold. The correction in the Dow is associated with a meaningful loss of intermediate-term momentum, the likes of which we have not seen since the first quarter of 2025. The recent bearish crossover in the weekly moving average convergence/divergence (MACD) suggests any bounce is likely to be brief and give way to a breakdown below the 200-day moving average, with former highs near 45,000 as secondary support, bolstered by the weekly cloud model. We often see corrections play out in an A-B-C pattern, meaning another leg lower is likely after a rebound, and a significant corrective low is probably at least a few weeks away. The Dow has pulled back in relative terms as well, having given back its year-to-date outperformance versus the S & P 500 . However, the ratio of the Dow to the S & P 500 is now short-term oversold within what appears to be a rounded base, suggesting the Dow should decline less than the S & P 500 (i.e., outperform) through the remainder of the correction. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: None. 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