I’ll discuss markets in more detail this weekend, but wanted to share something we’re watching.
Obviously this week has been wild with steep rallies and also just as steep selloffs. On the one hand we still have many stocks still attending the 80’s party rising in vertical fashion, $TSLA and $AMZN come to mind, on the other hand banks, small caps, and the larger market continue show sizable weakness, take it as a sign of a very bifurcated market in favor of a few stocks.

The chop in the action can be seen here in the futures chart, note how precise the rejection was at the .618 fib:

Technically very clean. Also note how many times support has held in the 3240 zone. Over and over buyers come in and want to defend this line.

Why? Because it’s a trend line on the weekly chart:

The trend line was resistance and now has become support. No wonder bulls want to defend it tenaciously. And likewise bears want to see it break to the downside. So it’s been the key battle zone all week.

What’s at stake? A quick look at the $DJIA shows a potential heads and shoulders pattern has formed:

That patterns has not triggered and remains unconfirmed, but a sustained move below the neckline and $DJIA would be technically targeting the 27,400-27,60o zone.

If it does then this area would present sizable support and set up for a long trade opportunity. But then know the neckline, so eagerly defended now would be resistance on a rally higher.

I’ll discuss more this weekend. For now this price zone remains a key battleground between bulls and bears and everybody is watching this space. More to come this weekend.

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

All content is provided as information only and should not be taken as investment or trading advice. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. For further details please refer to the disclaimer.