By Doug Busch
The Dow Jones Industrial Average has become the first major U.S. index to test its 200-day simple moving average, a closely watched technical level that often signals a shift in market momentum. With the S&P 500 and Nasdaq not far behind, investors are watching closely to see whether this early test by the Dow marks the start of a broader move higher, or simply the latest hurdle in an uneven recovery.
The Dow's daily chart shows the nice move off the "Liberation Day" lows last April right into the very round $50,000 number:
A doji candle, which often signals trend reversal, ended the lengthy advance on Feb. 10. Some positives include the completion of a bullish morning star pattern on March 31. That day saw the Dow rise 2.5% for its largest daily gain since May. There is bullish RSI divergence with a higher RSI low as price made a lower low and a bullish MACD crossover. Goldman Sachs and Visa are two names I've written about lately that will be more influential in the price-weighted index.
Attention now turns to two other names that could help determine the index's near-term direction: Apple Inc. and Home Depot.
Apple is up 42% over the past year, but has declined 5% in 2026. The stock is one of the best performers among the Magnificent Seven, as seen on the ratio chart against the Roundhill Magnificent Seven ETF. Apple is vying for its first three-week winning streak since last October. Looking at the daily chart, one can see the price has found support at its upward-sloping 200-day simple moving average:
It recorded a doji candle and a bullish morning star on March 20 and March 31, respectively. The right side of a cup base could be forming a potential pattern that started in early December. One can enter here and look for the stock to travel toward $285 in the second half of the year, representing a 12% gain from current prices. The stop is quite clear with any close below the 200-day simple moving average at $245 invalidates the bullish thesis. Apple was trading around $249 on Tuesday.
Home Depot is down 4% over the past year, and 5% year to date. The stock has moved lower six of the last seven weeks with all seven closing at or within the lower half of the range. It has underperformed its main rival, Lowe's, most of the past year as seen on the ratio chart. Looking at the daily chart, the stock is well underneath both its 50- and 200-day simple moving averages. This indicates HD is due for at least a dead cat bounce, if not something more significant:
A double bottom base could be forming in a pattern that began with a doji candle on Sept. 15. The potential pivot would be just below the very round $400 number where a bearish shooting star was recorded Feb. 12. First and foremost it must hold the lows of Monday's session, where it recorded a bullish engulfing candle. The stock has the potential to hit $375 by mid 2026, which would be a 20% gain from current prices. Remain bullish above $314. Home Depot was trading around $318 on Tuesday.
Whether it breaks through or stalls, the Dow's move may set the tone for what comes next.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 07, 2026 11:02 ET (15:02 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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