Dow Jones
The Dow Jones ended the previous trading week on a high note. Despite the NFP report showing that the jobs market lost 140k jobs in December, the Dow rallied in the last hours to end the week close to record highs. In the meantime, the futures corrected, and the hourly chart shows a potential head and shoulders pattern.
At this point, the stock market seems decoupled from reality. Not even the Capitol riot was not enough to scare investors.
The reason for the higher stock market prices comes from the Americans investing part of the stimulus instead of spending it. Studies showed that most of the financial help received by those earning less than $75,000 a year was spent on securities trading, thus justifying the higher stock market prices. If the same happens to the current stimulus, we should not be surprised to see even higher prices in the future.
While the pattern below is on the hourly chart, it does have the potential of showing a sharp market reversal. Bears may want to wait for the price to break below the neckline before going short with a stop loss at the highs and a take profit at the measured move (i.e., the target suggested by the orange line).
