LIVE MARKETS-Dow tries to build a base, but resistance looms ahead 

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DOW TRIES TO BUILD A BASE, BUT RESISTANCE LOOMS AHEAD

The Dow Jones Industrial Average .DJI has lagged behind its large-cap peers for months. While the S&P 500 .SPX and Nasdaq Composite .IXIC pushed to fresh record highs last week, the Dow was still digging out from a four-month low.

On September 30, the blue-chip average closed down 6.3% from its August 5 record closing high of 54,349. By last Friday, however, the Dow had posted its strongest weekly gain since early August, finishing at 51,654. While still nearly 5% below its record close and 5.6% below its all-time intraday high, the rebound marked a notable improvement in tone.

US stock futures are little changed on Monday as investors monitor oil prices and geopolitical developments ahead of a busy week of bank earnings and inflation data that could influence the Federal Reserve's rate outlook.

From a technical perspective, the Dow is finding support near the 38.2% Fibonacci retracement of its March-August advance at 51,403. The index slipped below that level late last month and early this month, but the breaks were shallow and short-lived. For now, bulls appear to be treating that area as a floor.

The challenge is that resistance lies just overhead. The September 25 high sits at 51,875, followed by the rising 100-day moving average near 52,140 and the September 22 high at 52,319. Above that come the 23.6% retracement at 52,458 and the declining 50-day moving average near 52,635.

If the Dow can clear that cluster, it would suggest the rebound is gaining traction and put the August highs back in focus.

A renewed close below 51,403, however, would suggest the recovery remains fragile. In that scenario, attention could shift to the October 1 low near 50,547, the early-February high at 50,513, and the rising 200-day moving average near 50,355. Below there, the June 10 low was at 49,909, the 50% retracement at 49,900 and an uptrend line from the April 2025 low near 49,700 could all come into play. A drop to that area would leave the Dow roughly 8% to 9% below its record highs.

(Terence Gabriel)

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