Market Analysis Summary: Major Rotation Flows and Drops – Dow Jones and US Index Outlook
Author: Elior Manier
Date: February 3, 2026
Market Overview
In the latest market action, US equity flows have shifted significantly towards traditional sectors after a prolonged period of technology outperformance. This change comes in the wake of a positive Manufacturing PMI report, which exceeded expectations (52.6 vs. 48.5 expected), drawing attention back to defensive sectors.
Key Themes
As we enter 2026, a clear theme of global divergence and concentrated trends has emerged. The era of passive investing, characterized by indiscriminate buying, particularly in tech stocks, appears to be waning. The tech sector, which has dominated the market for over 15 years, is now facing challenges as the narrative around AI becomes fully priced in. Consequently, equities are increasingly influenced by macroeconomic factors and valuation considerations.
Economic Resilience
Despite ongoing trade tensions and tariffs, the US economy continues to outperform growth expectations, providing a solid demand backdrop. This resilience is prompting a capital rotation towards more stable, lower-beta sectors, as investors seek relative value and wealth effects in previously overlooked areas of the market.
Technical Analysis
Today's session highlights the Dow Jones, Nasdaq, and S&P 500, with profit-taking flows potentially confirming a broader range-bound market. The following technical levels are critical for traders:
Dow Jones Technical Levels
Resistance Levels: 49,200 to 49,350 (Intraday Pivot), 49,400 (morning highs), 49,600 to 49,700 (ATH Resistance)
Support Levels: 49,000 to 49,100 (Pivotal Support), 48,600 to 48,700 (Intraday Support)
Nasdaq Technical Levels
Resistance Levels: 25,200 to 25,500 (Mid-range Pivot), 25,700 to 25,850 (Pivotal Resistance)
Support Levels: 25,000 to 25,250 (Minor Support), 24,500 (Main Support)
S&P 500 Technical Levels
Resistance Levels: 6,945 to 6,975 (Previous ATH Resistance), 7,000 to 7,020 (Current ATH)
Support Levels: 6,800 (Psychological Support), 6,789 (Greenland lows)
Conclusion
As the market continues to evolve, traders are advised to monitor sentiment closely, especially as we approach key technical levels. The shift towards traditional sectors may signal a longer-term trend, and understanding these dynamics will be crucial for navigating the current market landscape.
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