This week saw a 400-meter ship stopped by 5 meters of soil. A bunch of ships are now backlogged. 12% of the world freight goes through the canal. It is the location of that ship and the soil that makes the situation so important.
Somehow to me, I see some of the same traits in the market right now.
The entire momentum trade is sitting right at the base of support, and, if they all get unstuck here and move higher, we can breath a sigh of relief. If they all start to drop below support, this could create a real surge lower. It is a big backlog if they all start to fail.
Shopify is threatening to break down through the support dike at $1065. It is also the 200-DMA level (green line). I don't like the 4-month lows on the relative strength to the $SPX in purple.
Tesla has been underperforming the $SPX since February. That was shortly after the January high. Now, support at $600 continues to be tested. Over the next few weeks, this needs to hold on one of the most-watched stocks.
Ballard Power (BLDP)
Ballard has been one of the big alternative power stocks. The chart needs to hold support at $22.
ServiceNow is already making 6-month lows in relative strength. There is a pretty big top here; it needs to hold there.
Peloton sits at $100 and the 200-DMA. Another one where the dike could break.
ROKU is already down $150 off the highs. Sitting on support.
I could go on and on. We are at a very important level that needs to hold.
Already this week, we have over 1600 stocks down big on the week. We only have a little more than 100 stocks up using the same scan criteria this week. But the $SPX is only down 4 points on the week. Its a fragile market. Be prepared for both directions.
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies
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