DOW Friday closing price - 12341

The first real sign of weakness was seen in the DOW this past week when it closed in the red on Friday, causing the previous week's close at 12380 to be a successful retest of the previous 33-month high weekly close at 12391 seen in February. In addition, a failure to follow through signal was also given as the index made a new 33-month intra-week high during the week but was unable to confirm the breakout when it closed below the 2 previous high closes.

The failure signal in the DOW was particularly indicative inasmuch as the index had been the "leader of the pack" for the last 4 weeks and its failure suggests that even buying in the always dependable Blue Chip stocks could be coming to an end.

On a weekly closing basis, resistance is minor to decent at 12380 and decent at 12391. On a daily closing basis, resistance is decent at 12391 and decent to strong at 12426. On a weekly closing basis, support is minor to decent at 11858, very minor at 11823 and then nothing until 11100 is reached. On a daily closing basis, support is minor at 12263 and again at 12197. Below that level there is minor to decent support between 12090 and 12058.

The inability of the bulls to even get the DOW up to the previous week's close at 12380 on Friday, in spite of the fact that it was options expiration day and buying was being seen, means the bulls have lost the edge they had recently obtained. The bulls are now totally dependent on positive fundamental news to generate new buying to keep the uptrend intact. Nonetheless, the earnings and economic reports that did come out this past week were not better than expected and if that trend continues next week (now looking more likely), disappointment will increase.

As far as support is concerned, the DOW did bounce off of the 50-day MA (currently at 12177) on Thursday when it dipped down to 12163. The 50-day MA has been a major indicator of support/resistance for the past 3 years and bouncing off of it had to be considered a positive. The index also closed in the upper half of Friday's trading range (12272 to 12369) and that suggests that further upside will be seen at the beginning of the week, especially since there are no economic or earnings reports of consequence on Monday.

Decent resistance in the DOW is found at the February highs at 12393. A rally up to that level, above Friday's high of 12369, is likely to be seen on Monday. Nonetheless, based on the chart negatives generated this past week, the bears are likely to defend that level strongly next week, at least until the important earnings reports (GS, AAPL, IBM, WFC) come out Tuesday AM and Wednesday PM.

On a positive note for the bulls the index also closed in the upper half of the week's trading range suggesting that those highs at 12444 could be broken if the traders get good earnings reports this week. Such an event would erase all the negatives generated this past week and the DOW could resume its upward trend. Nonetheless, that is not something the bears want to allow to happen as getting above 12444 could generate new technical buying. As such, though the index did close in the upper half of the week's trading range, the bears are likely to make a stand at the previous high at 12393. If successful, the week's lows at 12163 would be at risk of being broken and a trading range like 12391 to 12110 could be the goal.

Probabilities favor a 12393-12292 trading range on Monday and then the earnings reports taking center stage Tuesday and Wednesday. If those reports are better than expected, the index could get above 12444 and the negatives of last week erased. By the same token, if the earnings reports do not help, last week's low at 12163 will likely be broken, taking the index down to the 12000/12100 level where further support is found.

It should be mentioned that traders have begun to turn slightly pessimistic as it is becoming evident that the economy is slowing down and the rosy picture that was being painted at the beginning of the year is not coming to fruition. In addition, it is now the third week of April and the 4-year April rally trend has not even started. The index finds itself presently 40 points "below" the March high. Simply stated, the bulls now need strong fundamental help as momentum has been lost and not likely to be regained without some positive surprises. The probabilities do not favor those surprises being seen.

There are no economic reports of major consequence due out this week so everything will be centered on earnings and world events. Technically speaking the bears now have a slight edge in the DOW and it's up to the bulls to take it away. Possible trading range for the week is 12393 to 12110.

NASDAQ Friday closing price - 2763

The NASDAQ confirmed, with a second red close in a row, that the weekly close 2 weeks ago at 2789 was a successful retest of the 10-year high weekly close at 2833 that was made the second week of February. In addition, on the daily chart the index is showing a possible bearish inverted flag formation that if broken (a drop below 2733) would give an objective of 2692.

On the positive side, the NASDAQ was able to close above the 50-day MA on Friday and if the index can get above the most recent high at 2772, the bearish inverted flag formation would be negated and the index would likely test the 2800 level one more time.

On a weekly closing basis, resistance is minor to decent at 2789 and strong at 2833. On a daily closing basis, resistance is minor at 2782, decent to strong at 2798 and strong at 2833. On a weekly closing basis, support is minor to decent at 2686 and decent 2643. Below that there is now support until the low 2500's are reached. On a daily closing basis, support is minor to decent between 2722 and 2745, minor to decent again at 2686 and decent at 2616.

The NASDAQ, like the other indexes, seems to be waiting for further fundamental news before deciding on a trend direction. Nonetheless, small negatives continue to mount, starting with the fact that the breakaway gap, originally between 2823 and 2808, was not closed when the index got up to 2815 last week and also the fact that the index has failed to negate the failure to follow through signal given in February as well, as the index has not been successful in closing above the previous 10-year high at 2810, in spite of the several rallies above 2800 seen over the past few weeks.

In looking at the daily chart for short-term direction, the NASDAQ traded between 2733 and 2772, straddling the 50-day MA (currently at 2756) between Tuesday and Friday of last week. A break above or below those 2 levels is likely to generate at least a 30 point move in that direction with 2802 being the upside objective and 2705 being the downside objective.

By the same token, trading between 2680 and 2810 continues to be a demilitarized zone where nothing is all that important except to the short-term traders trying to scalp some profits. The NASDAQ literally has to have a weekly close above 2833 or below 2643 for it to mean anything of consequence.

Due to the bearish inverted flag formation on the daily chart, probabilities do favor the downside this coming week, with a possible trading range of 2766 to 2705.

SPX Friday closing price - 1319

The SPX, like the NASDAQ, also confirmed with a red close for the second week in a row that the high close seen 2 weeks ago at 1332 was a successful retest of the 1343 weekly closing high.

The SPX did receive 2 important earnings reports this past week when JPM and BAC reported. Earnings were better than expected in JPM and as expected with BAC but in both cases the stocks sold off after the report, suggesting that the financial industry is not yet making the kind of progress that the market wants to see.

On a weekly closing basis, resistance is minor to decent at 1332 and decent to strong at 1343. On a daily closing basis, resistance is minor at 1330, decent at1335 and strong at 1343. On a weekly closing basis, support is decent between 1276 and 1279, minor at 1236 and decent at the 200-week MA, currently at 1190. On a daily closing basis, support is minor at 1314, minor to decent at 1306, minor to decent again at1298/1300. Below that level, minor to decent support is found at1276, and decent to strong at 1256.

The 75% Fibonacci retracement level at 1343/1344 remains the strongest factor in the SPX, and likely in the overall market. Having established that exact level as a resistance with no previous highs there, suggests that the Fibonacci number is the absolute key to what the indexes will do the rest of the year (not only for the immediate term). As such, until that level gets broken, the downside will remain the most probable direction.

This past week, the SPX was able to bounce off of the 50-day MA, currently at 1314, and give the bulls some hope that the uptrend will resume. Nonetheless, the bounce failed to reach the intra-week resistance at 1330 in spite of the fact that the DOW did have a relatively strong day. With both SPX stocks that reported earnings this week trading in the red, the rally has to be considered feeble at best.

For this coming week, resistance in the SPX is at 1330 and support is at 1302 and then again at 1294. The pivot point is the 50-day MA, currently at 1316. A close below the 50-day MA will likely cause the support at 1302 to break and a drop to 1294 to occur.

Probabilities are about even with the SPX as there is room for an uneventful rally up to 1330 as well as down to 1294, and perhaps even to the 50-week MA, currently at 1289.

More reports of importance for the index will be seen this week with GS reporting Tuesday morning and WFC reporting Wednesday afternoon. Recent action over the past few earnings reports seem to suggest that even if the reports come in better than expected that the stocks will sell off. From that point of view, probabilities likely favor the index closing lower next week.

Everything is now getting into macro evaluations of the charts as there seems to be an impasse at this time between the bulls and the bears. Earnings reports will again take center stage this week, but it is getting evident that even if they come out better than expected that a rally in the indexes may not occur. The market is looking "tired" and under such a scenario it is only a matter of time for the indexes to fall.

The bulls have been relentless, though, in trying to keep the momentum and uptrend going, but every day there seems to be less ammunition they can use. The April rally factor is starting to fade as the indexes are now into the third week of April and are still trading lower than last month's high, which is making that 4-year trend more unlikely to be repeated.

The indexes do seem to be fading and if the important earnings reports due out this week (AAPL, GS, WFC, and IBM) do not add fuel to the fire of the bulls, the disappointment will grow a bit more. Probabilities are now starting to shift back to the bears, though still very slightly.