Dow Jones at 50,000 Points: A Historic Record and a Psychology Lesson

Welcome to Good Morning Trading. I am delighted to be back with you to take stock after an absolutely crazy end to the week. If I had to summarize the situation, we went from a Black Thursday on tech stocks to a Friday of total euphoria on traditional values. It is quite rare to experience such marked and asymmetric movements in such a short time.

Historically, we are at incredible levels, particularly on the Dow Jones, which is crossing major psychological thresholds. This is the ideal time to set a clear mental framework and analyze these movements with a bit of perspective and discipline.

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A Total Dichotomy in the US Market

The end of last week offered us a fascinating spectacle in two acts. On one side, we had a big scare on the Nasdaq and the S&P 500 on Thursday, followed by a technical rebound on Friday. On the other, a bullish explosion on the Dow Jones.

1. Tech: Between Punishment and Opportunism

The technology sector was shaken. Amazon fell by over 5% because investors did not understand the massive increase in their capital expenditure. However, the semiconductor sector remains the locomotive: Nvidia and Broadcom gained over 7% on Friday. The market is betting that the billions invested in AI will necessarily end up in their pockets.

2. Supply Creates Demand: My Amazon Experience

To illustrate why I remain confident about Amazon despite the drop, let's take a simple analogy: my own consumption. Their AI algorithms are formidable. They targeted me with a red mouse with a triple scroll wheel—totally useless, but which I suddenly craved. This is the foundation of our economic system: supply creates demand. As long as they know how to tempt us this effectively, the business model will hold.

3. Rotation Towards the Dow Jones

This is the highlight: the Dow Jones has surpassed 50,000 points. We are at over 50,260 points as I speak to you. I remember an author in the 80s who predicted the Dow at 12,000 points. Everyone mocked him at the time. Today, we have quadrupled that target. It is a beautiful lesson in humility given crowd psychology and ambient pessimism.

Technical Overview and Nuances

Beyond the euphoria on the Dow, the situation remains complex on other assets. We must keep a cool head.

• Nasdaq & S&P 500: The Nasdaq rebounded off the 25,000 points level after touching its yearly low on Thursday. It is an encouraging sign, but be careful: we are right under a bearish trend line. As long as we hold 25,000, it remains okay, but caution is required.
• Bitcoin: It is a cold shower. It has lost 40% since its peaks, going from nearly 100,000 to 60,000 dollars in a few weeks. There, it is attempting to stabilize on the 70,000 level (monthly support), but the structure is hyper fragile.
• Gold: The yellow metal is treading water. Clearly, investors preferred to arbitrate in favor of Dow Jones stocks (Coca-Cola, McDonald's, banks) rather than taking refuge in gold.
• Europe (CAC 40 & DAX): The CAC 40 acts like a "mini Dow Jones". It is at its highs of the last 15 days, driven by this positive dynamic. The DAX, meanwhile, is stabilizing on its monthly pivot, just under 25,000 points.

Conclusion

We are starting this week with US indices in dispersed order but with a historic bullish bias on industrial values. In the absence of immediate major statistics, the European market risks waiting for the American opening to choose its direction. Remain cautious, prioritize discipline, and watch the key levels we have identified.

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