The global stock markets experienced a volatile session on January 21, 2026, initially surging following a surprisingly moderate tone from President Trump during his speech at the World Economic Forum in Davos. However, this early optimism gave way to profit-taking as the day progressed, highlighting the underlying anxieties still present in the market. The rebound, while welcome, appears fragile, and traders are carefully assessing technical levels to determine the next likely move. This article will delve into the factors driving the market’s reaction, analyze key commodity movements, and explore potential trading levels for the Dow Jones, Nasdaq, and S&P 500.
Initial Market Rebound Following Davos Speech
President Trump’s address in Davos proved to be a pivotal moment, at least temporarily. Following a weekend of negative sentiment sparked by the administration’s assertive stance on acquiring Greenland – a move perceived as potentially escalating geopolitical tensions – investors were bracing for further volatility. The demand for Greenland was described as “blunt,” raising concerns about a broader shift towards more aggressive foreign policy, even with established allies. This fear was amplified when the European Union suspended the July US-EU Trade Agreement.
However, Trump’s speech largely avoided further escalation, specifically stating he wouldn’t pursue military force. This shift in rhetoric provided a much-needed boost to investor confidence, triggering a broad-based rally across many global markets. The initial surge was particularly noticeable in US equities, with all major indexes posting gains of 1% or more. Asian markets, including the Nikkei, also began to recover from recent declines. This positive reaction demonstrates the market’s sensitivity to geopolitical risks and the impact of presidential communication.
Commodity Markets See Significant Gains
The easing of tensions wasn’t limited to the stock market. Commodity prices also experienced a substantial rebound. West Texas Intermediate (WTI) crude oil climbed back to $60 per barrel, while natural gas continued its impressive rally, gaining another 20% on the day. Precious metals also benefited from the improved sentiment. Gold and platinum both rose by 3%, reaching new highs, and silver saw a notable increase, although it faced resistance near $93. This broad-based recovery in commodities suggests a renewed appetite for risk assets and a potential easing of concerns about a global economic slowdown. Market sentiment clearly played a role in this across-the-board increase.
Technical Analysis: Key Levels to Watch
Despite the initial gains, the market’s rally lost steam as the session wore on, with profit-taking becoming the dominant force. Understanding key technical levels is crucial for navigating this uncertain environment. Here’s a breakdown of potential trading levels for the major US indexes:
Dow Jones Industrial Average (DJIA)
The Dow Jones experienced a strong rebound, breaking out of a recent corrective sequence and retesting the 49,000 Momentum Pivot Area. However, momentum appears to be waning, with the sharp rally showing signs of slowing volume. The 2-hour Relative Strength Index (RSI) is in bullish territory, but a retest of a neutral area could signal a potential pullback.
- Resistance Levels: 49,000 (Christmas ATH & 2H MA 200), 49,067 (Session High), 49,200-49,300, 49,650-49,670 (Current ATH), 50,000 (Psychological Resistance)
- Support Levels: 48,700 (Intraday Support), 48,600, 48,300-48,500 (November ATH), 48,339 (Session Lows), 48,000 (Psychological Support), 45,000 (Main Support)
Nasdaq Composite
The Nasdaq’s recovery has been less convincing than the Dow’s. It remains within a descending sequence, with the morning rally largely retraced. Failure to surpass the 25,000 Pivotal support zone suggests a bearish mid-term outlook.
- Resistance Levels: 25,200-25,500, 25,330 (2H MA 50 & Session Highs), 25,700-25,850, 26,100-26,300 (All-time high resistance zone), 26,182 (Current ATH)
- Support Levels: 25,000-25,250, 24,913 (Session Lows), 24,500 (Main Support), 22,000-22,229 (Early 2025 ATH)
S&P 500
The S&P 500 is currently testing the lower bounds of its key session support area (6,830 to 6,850). A rebound from this level could signal renewed bullish momentum. However, a break below 6,830 would likely confirm a further downward trend, potentially accompanied by a bearish crossover in the 50 and 200-period moving averages. Technical indicators suggest caution is warranted.
- Resistance Levels: 6,880-6,900, 6,887 (4H 200-period MA), 6,945-6,975 (Previous ATH Resistance), 7,000 (Current ATH Resistance)
- Support Levels: 6,830-6,850, 6,800 (Psychological Support), 6,789 (Session Lows), 6,720-6,750 (Mid-December Lows), 6,400 (Major Psychological Support)
Economic Calendar and Future Outlook
The economic calendar remains relatively quiet for the remainder of the session. Notable releases include a strong Canadian Producer Price Index (PPI) report, likely reflecting supply chain adjustments due to tariffs, and a surprisingly sharp decline in US Pending Home Sales, falling 9.3% against expectations of a 0.4% rise.
Tomorrow’s release of crucial PCE (Personal Consumption Expenditures) and GDP (Gross Domestic Product) data will be particularly important, as these figures will heavily influence the Federal Open Market Committee’s (FOMC) decision-making process next week.
In conclusion, while President Trump’s Davos speech provided a temporary reprieve for the stock markets, the subsequent profit-taking underscores the continued fragility of the current rally. Traders should closely monitor the technical levels outlined above and remain cautious, particularly in light of upcoming economic data releases. The market’s reaction to these releases will likely set the tone for the week ahead.
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