Cliff dive
Are 2026’s highs already in the rearview? After weeks of gravity-defying gains, US stock indices took a sudden nosedive Friday that might just signal the end of the rally.
The Dow dropped 1.4%, the S&P 500 fell 2.6%, and the Nasdaq 100 plunged 4.2%. Sure, these declines are light years from Black Monday 1987’s carnage, but this red Friday still has traders on edge.
As usual, the Monday morning quarterbacks are out in force with their explanations: jobs data came in too hot, rate hikes look inevitable, the market needed a breather. All true. But the market’s failure to worry about the early signs of a real pullback, matched only by its eagerness to celebrate a peace deal that doesn’t exist yet, should have investors treading very carefully.
My trading plan
Another week, another case of déjà vu. Dow futures are trying to start the week on the right foot, but just like last Monday, the index got rejected just shy of its key target on Thursday: the monthly R1 resistance.
In pre-market, sellers took control with cautious profit-taking at last week’s lows that sparked a bounce, but this recovery could be short-lived.
Given the setup, I’m favoring short trades again, targeting the buyer stops sitting below support at 50,386 points (a past double bottom that now lines up with the new monthly pivot at 50,436 points).
Note: Watch for any US-Iran deal announcement that could trigger a temporary spike higher.
Happy trading!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
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