Bearish Forecast for the Dow Jones Starting May 15, 2025
Bearish Forecast for the Dow Jones Starting May 15, 2025
The Dow Jones Industrial Average is poised to begin a significant decline, potentially as early as today, May 15, 2025, targeting a retest of the price low from April 7, 2025 (~36,611.78), and possibly lower. This movement is driven by renewed trade tensions, disappointing economic data, and bearish market sentiment.
1. Fundamental Factors Driving Potential Decline
Fundamental factors provide the macroeconomic and policy-driven rationale for the anticipated downturn in the Dow Jones.
1.1. Renewed Uncertainty in Trade Policy
The Dow’s rally on May 12–13, 2025, was fueled by optimism over a temporary U.S.-China tariff reduction agreement (90-day truce) announced after talks in Switzerland on May 11, 2025. However, as of May 15, 2025, investor confidence is faltering due to a lack of progress in ongoing U.S.-China trade negotiations.
Trigger for May 15: A Reuters report from May 14, 2025, notes that U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are meeting with Chinese officials, but no new agreements have been confirmed. If today’s talks fail to deliver positive outcomes or if President Trump escalates tariff rhetoric, the Dow could plummet, as seen in early April when tariffs triggered a 5.5% single-day drop. The Dow, with its heavy weighting of multinational corporations, is particularly vulnerable to trade war fears, which could drive it toward the April 7 low as investors price in higher costs and slower global growth.
1.2. Disappointments in Economic Data
CPI Reaction: The April 2025 Consumer Price Index (CPI), released on May 14, 2025, showed inflation at 2.3% annually, below the expected 2.4%. However, the Dow’s decline (-0.6%) on May 14 suggests investors expected a lower figure to support Federal Reserve rate cuts, reflecting skepticism about inflation cooling further.
Producer Price Index (PPI) Release on May 15: The PPI for April 2025, due at 8:30 AM ET (2:30 PM CEST) on May 15, 2025, is critical. A higher-than-expected PPI, potentially driven by tariff-related cost pressures, could signal rising consumer prices, reducing hopes for Fed easing and triggering a sell-off. Consensus expects a 0.2% monthly increase; a reading above 0.3% could echo the April market reaction when GDP contraction fears pushed the Dow to 36,611.78.
Consumer Sentiment: The University of Michigan Consumer Sentiment Index for May 2025, released on May 14, likely showed continued weakness (April: 52.2, a multi-year low). A further decline could heighten concerns about reduced consumer spending, impacting Dow components like Walmart and Home Depot.
1.3. Concerns Over Federal Reserve Policy
On May 7, 2025, Fed Chair Jerome Powell cited “elevated uncertainty” due to trade policies, with markets expecting 75 basis points of rate cuts in 2025, starting in July. If today’s PPI or Initial Jobless Claims (8:30 AM ET) indicate persistent inflation or economic weakness, rate cut expectations could fade, increasing borrowing costs and pressuring Dow valuations, mirroring the April 7 recession fears.
2. Technical Analysis
The Dow’s initial decline in April was approximately -19.00%, with a second impulse of similar magnitude. Technical indicators suggest a bearish setup for May 15, 2025:
Current Level: The Dow closed at 42,051.06 on May 14, 2025, down 0.6%, testing support at 42,000.
Bearish Signals: A 12-hour timeframe analysis indicates alignment for a decline, with potential bearish candlestick patterns (e.g., bearish engulfing) and overbought RSI (70). A break below 42,000 could target the 200-day moving average (40,500) and the April 7 low of 36,611.78.
Price Targets:
Retest of April 7, 2025, low: ~36,611.78
Secondary target: ~35,970.70 (based on Fibonacci extensions and prior support zones).
3. Market Sentiment and Behavioral Factors
Fragile Optimism: The Dow’s 15% recovery from April lows was driven by trade truce hopes and select stock strength. Bloomberg’s May 14, 2025, report notes Wall Street’s rebound is “showing signs of exhaustion” due to trade risks. The Dow’s May 14 weakness, led by an 18% UnitedHealth drop, could spread if negative news emerges today.
Global Correlation: Mixed Asian market performance on May 14 (e.g., Nikkei up 1.43%, India’s Nifty 50 down 1.27%) suggests vulnerability. A lower Asian open on May 15, driven by U.S. declines or trade news, could amplify selling pressure on the Dow.
4. Evidence-Based Framework for the Forecast
4.1. Catalysts for Today’s Decline (May 15, 2025)
PPI Data (8:30 AM ET): A PPI reading above 0.3% could signal sticky inflation, reducing Fed rate cut odds and sparking a sell-off.
Trade Talk Updates: Negative U.S.-China trade comments (e.g., no Geneva deal) could reignite fears, mirroring April 7.
Initial Jobless Claims (8:30 AM ET): Claims above 220,000 (vs. prior 211,000) could signal labor market weakness, fueling recession concerns.
4.2. Dow Scenario
Expect a wave-like decline with corrections. The Dow could fall below 36,611.78, potentially reaching ~35,970.70 if trade and economic pressures intensify. Extreme caution is advised in 2025.
4.3. Global Scenario for S&P 500
I anticipate a wave-like decline with intermittent corrections. I wouldn’t be surprised if the S&P 500 falls below 4,700, potentially reaching 4,200. Extreme caution is warranted this year. There’s even a theory that, starting in 2025, the U.S. dollar could lose 50% of its purchasing power.
Idea:
New Screenshot:
4.4. Oil and Geopolitical Outlook
I expect oil (Brent) to decline to the $50+/- range, from which an upward trend may begin, potentially tied to future military conflicts:
· Europe vs. Russia
· India vs. Pakistan
· Iran vs. Israel
Brent (UKOIL):
Natural Gas:
The Dow Jones Industrial Average is poised to begin a significant decline, potentially as early as today, May 15, 2025, targeting a retest of the price low from April 7, 2025 (~36,611.78), and possibly lower. This movement is driven by renewed trade tensions, disappointing economic data, and bearish market sentiment.
1. Fundamental Factors Driving Potential Decline
Fundamental factors provide the macroeconomic and policy-driven rationale for the anticipated downturn in the Dow Jones.
1.1. Renewed Uncertainty in Trade Policy
The Dow’s rally on May 12–13, 2025, was fueled by optimism over a temporary U.S.-China tariff reduction agreement (90-day truce) announced after talks in Switzerland on May 11, 2025. However, as of May 15, 2025, investor confidence is faltering due to a lack of progress in ongoing U.S.-China trade negotiations.
Trigger for May 15: A Reuters report from May 14, 2025, notes that U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are meeting with Chinese officials, but no new agreements have been confirmed. If today’s talks fail to deliver positive outcomes or if President Trump escalates tariff rhetoric, the Dow could plummet, as seen in early April when tariffs triggered a 5.5% single-day drop. The Dow, with its heavy weighting of multinational corporations, is particularly vulnerable to trade war fears, which could drive it toward the April 7 low as investors price in higher costs and slower global growth.
1.2. Disappointments in Economic Data
CPI Reaction: The April 2025 Consumer Price Index (CPI), released on May 14, 2025, showed inflation at 2.3% annually, below the expected 2.4%. However, the Dow’s decline (-0.6%) on May 14 suggests investors expected a lower figure to support Federal Reserve rate cuts, reflecting skepticism about inflation cooling further.
Producer Price Index (PPI) Release on May 15: The PPI for April 2025, due at 8:30 AM ET (2:30 PM CEST) on May 15, 2025, is critical. A higher-than-expected PPI, potentially driven by tariff-related cost pressures, could signal rising consumer prices, reducing hopes for Fed easing and triggering a sell-off. Consensus expects a 0.2% monthly increase; a reading above 0.3% could echo the April market reaction when GDP contraction fears pushed the Dow to 36,611.78.
Consumer Sentiment: The University of Michigan Consumer Sentiment Index for May 2025, released on May 14, likely showed continued weakness (April: 52.2, a multi-year low). A further decline could heighten concerns about reduced consumer spending, impacting Dow components like Walmart and Home Depot.
1.3. Concerns Over Federal Reserve Policy
On May 7, 2025, Fed Chair Jerome Powell cited “elevated uncertainty” due to trade policies, with markets expecting 75 basis points of rate cuts in 2025, starting in July. If today’s PPI or Initial Jobless Claims (8:30 AM ET) indicate persistent inflation or economic weakness, rate cut expectations could fade, increasing borrowing costs and pressuring Dow valuations, mirroring the April 7 recession fears.
2. Technical Analysis
The Dow’s initial decline in April was approximately -19.00%, with a second impulse of similar magnitude. Technical indicators suggest a bearish setup for May 15, 2025:
Current Level: The Dow closed at 42,051.06 on May 14, 2025, down 0.6%, testing support at 42,000.
Bearish Signals: A 12-hour timeframe analysis indicates alignment for a decline, with potential bearish candlestick patterns (e.g., bearish engulfing) and overbought RSI (70). A break below 42,000 could target the 200-day moving average (40,500) and the April 7 low of 36,611.78.
Price Targets:
Retest of April 7, 2025, low: ~36,611.78
Secondary target: ~35,970.70 (based on Fibonacci extensions and prior support zones).
3. Market Sentiment and Behavioral Factors
Fragile Optimism: The Dow’s 15% recovery from April lows was driven by trade truce hopes and select stock strength. Bloomberg’s May 14, 2025, report notes Wall Street’s rebound is “showing signs of exhaustion” due to trade risks. The Dow’s May 14 weakness, led by an 18% UnitedHealth drop, could spread if negative news emerges today.
Global Correlation: Mixed Asian market performance on May 14 (e.g., Nikkei up 1.43%, India’s Nifty 50 down 1.27%) suggests vulnerability. A lower Asian open on May 15, driven by U.S. declines or trade news, could amplify selling pressure on the Dow.
4. Evidence-Based Framework for the Forecast
4.1. Catalysts for Today’s Decline (May 15, 2025)
PPI Data (8:30 AM ET): A PPI reading above 0.3% could signal sticky inflation, reducing Fed rate cut odds and sparking a sell-off.
Trade Talk Updates: Negative U.S.-China trade comments (e.g., no Geneva deal) could reignite fears, mirroring April 7.
Initial Jobless Claims (8:30 AM ET): Claims above 220,000 (vs. prior 211,000) could signal labor market weakness, fueling recession concerns.
4.2. Dow Scenario
Expect a wave-like decline with corrections. The Dow could fall below 36,611.78, potentially reaching ~35,970.70 if trade and economic pressures intensify. Extreme caution is advised in 2025.
4.3. Global Scenario for S&P 500
I anticipate a wave-like decline with intermittent corrections. I wouldn’t be surprised if the S&P 500 falls below 4,700, potentially reaching 4,200. Extreme caution is warranted this year. There’s even a theory that, starting in 2025, the U.S. dollar could lose 50% of its purchasing power.
Idea:
New Screenshot:
4.4. Oil and Geopolitical Outlook
I expect oil (Brent) to decline to the $50+/- range, from which an upward trend may begin, potentially tied to future military conflicts:
· Europe vs. Russia
· India vs. Pakistan
· Iran vs. Israel
Brent (UKOIL):
Natural Gas:
Trade active
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.