DOW Friday closing price - 12582

The DOW had the biggest 1-week rise since the second week of March 2009 when the index found a bottom to the bear market (Mar09 rally was 732 points and this week was 662). The reasons for the rally were all positive negatives (reports that were not as bad as expected but still not good), starting with the news that the Greek default had been averted as well as better than expected ISM Index and Chicago PMI reports. In addition, it is probable that the extent of the week's rally had to do with the fact the index was in a short-term oversold condition as well as the fact that a couple of earnings reports were positive, giving hope to the bulls that the important earnings this coming quarter may not be as bad as it has been anticipated in some quarters.

The DOW also accomplished several chart feats, inasmuch as it negated all the recent breaks of MA's (50 and 100 day and 20 week) as well as broke above 2 decent intra-week resistance levels at 12393 and at 12450. The conglomeration of positive chart events also caused new technical buying and short-covering to occur. The momentum gained such strength that the bears were not about to attempt to stop the rally without a full complement of traders to have any success with, and likely waited until after the holiday week is over, or even perhaps until the earnings report quarter starts the second week of July to sell aggressively again as a group.

On a weekly closing basis, resistance is minor at 12743/12769 and strong at 12810. On a daily closing basis, resistance is minor at 12605 and again at 12760. Decent to strong resistance is found at 12810. On a weekly closing basis, support is decent at 11858 and the nothing until minor to decent support is found at 11092/11100. On a daily closing basis, support is minor at 12356, minor to decent at 12201, and minor again at 12058. Decent to strong support will be found between 11897 and 11937.

It is probable that the DOW over-accomplished to the upside this past week due to the factors mentioned above, especially since none of the fundamental information was of sufficient positive strength to have caused this to happen at any other time. In addition, the fundamental factors that did appear this past week were positive, compared to the recent dim outlook that had been presented over the past few weeks, and with no economic reports likely to contradict any of the speculation seen this past week until next Friday's Jobs reports, the bulls felt comfortable in pushing the index to the max, causing it to close at the highs of the week on Friday and with further prospects of continued upside at the beginning of the week. Nonetheless, the recent 34-month highs seen 9 weeks ago at 2875 are probably not going to be broken this coming week as the bulls likely need a lot more fundamental help to be able to accomplish such a feat, especially with a full complement of bear traders that are likely to be seen by the middle of the week.

By the same token, there are only minor resistances above, at 12605, and at 12760, before the DOW reaches the previous 34-month high at 12875. Technically speaking the action seen this past week, as well as the close on the highs of the week, should take the index straight up to the 12875 level before any decent selling is to appear. Nonetheless, the fundamental picture does not fully support that scenario at this time. In fact, the bulls have put themselves in a bit of a "pickle" since any failure signal is likely to be met with decent to strong selling, possibly causing the same kind of overreaction to the downside.

On the other side of the coin, the index would have to drop quite a bit to give a failure signal, something that is unlikely to happen this coming week. A drop below the 50-day MA, currently at 12375, would start to sway the traders the other way, and a drop and close below the 100-day MA, currently at 12285, would bring out the bears in numbers.

The probabilities are high that the DOW will get back to test the MA's mentioned as they have been of high importance over the past 5 weeks and likely need to be tested technically before any further upside of consequence occurs, if it is to occur. This is especially true if the bulls want to have a good chance at taking out the 34-month highs and head up to the 13,000 level which has been one of the main objectives of the bulls this year.

The DOW generated a huge trading range this past week with a low of 11934 and a high of 12596. This certainly opens up a possible can of worms because if the trading range is mimicked in any way this coming week, either to the upside or downside, it could have dramatic effect. The 20-week MA, currently at 12310 is likely to be the pivot point this week as well as the potential low of the week. Considering that the index rallied 662 points this past week, a low of 12310 could give a high objective of 12972, if the range is duplicated. Probabilities do not favor this trading range scenario as more often than not the week after a big move the index usually has a much smaller trading range. Nonetheless, that is what the technical bulls will be shooting for.

The probabilities favor the DOW having a smaller trading range with 12280 to 12310 as the likely low for the week. To the upside, it truly is anybody's guess as the resistances above at 12605 and at 12760 are both minor and not likely to pose much resistance if the bulls push hard. By the same token, it seems unlikely that either side will be very aggressive this week, facing the Jobs report on Friday as well as the beginning of the next earnings quarter the week after. Earnings are expected to drop, mostly because seasonally the summer brings a lull to sales. In addition, the economy has been slowing down, with proof of that being the lowered GDP numbers that have come out the last 2 months. As such, the bulls are not likely to put themselves at risk of getting beat down aggressively the week after if earnings are bad. By the same token, the bears are not likely to be aggressive either, especially after getting their heads handed to them, both technically and fundamentally, this past week.

I would venture a guess that the possible trading range for this coming week will be something like 12310 to 12760 with a bit more red than green being seen during the week.

NASDAQ Friday closing price - 2816

The NASDAQ outperformed the other indexes this past week, mainly because the tech sector was the leader to the upside. The NASDAQ, like the other indexes, sliced through all the MA's that had been broken to the downside and rallied up close to several decent to strong resistance levels built over the past 6 months between 2840 and the 10-year high at 2887. The index rallied a total of 171 points, surpassing the rally seen the second week of March 2009 from the major 1268 low which was 168 points. The index closed on its highs of the week, suggesting that further upside of consequence could be seen this coming week.

The NASDAQ was the leader to the upside for the first 18 months of the recovery and having taken back the title of leader has to be worrisome to the bears. The index is within 2.5% of making a new 10-year high and if the index simply mimics last week's trading range to the upside, it will be close to reaching the 3000 level.

On a weekly closing basis, resistance is minor to decent at 2833 and strong at 2873. On a daily closing basis, resistance is decent at 2833/ 2835 and strong at 2873/2876. On a weekly closing basis, support is minor at 2764, at 2689 and at 2643. Decent to strong support is now at 2616. On a daily closing basis, there is very minor support at 2782, minor at 2746 and minor to decent at 2722. Below that level, there is 2686 and strong support at 2616.

Too much, too fast, and too soon might be a good portrayal of what happened to the NASDAQ this past week. Nonetheless, it happened and now the question is "what will happen this week?" The spike type action and close on the highs of the week suggest strong follow through to the upside will be seen, with the 10-year high at 2887 as the target. Nonetheless, there is a major double top on the daily closing chart at 2871/2873 (2887 intra-week) as well as decent to perhaps strong resistance, also on a daily closing basis, at 2833/2835 (2840 intra-week), which strongly suggest the index will be "unable" to generate the strong follow through the chart implies will happen. One of those 2 levels, and likely the lower one, should stop the rally this week awaiting the Jobs report on Friday and earnings reports next week.

As such, if the NASDAQ stops at the lower resistance level, it has to be expected that quite a bit of red will be seen this week, simply because the 172 point trading range last week will likely have at least 40-50% of that seen this week (an 80-90 point trading range is likely). Using the decent to strong daily close resistance at 2833/2835, which is likely to stop the index this time around, it would mean the index would get down to at least the 50 and 100 day MA's, currently at 2762 and 2758 respectively. Much like the other indexes, those MA lines are expected to be support this week, as well as a possible pivot point. Technically speaking, the probabilities are high those levels will be tested even if the indexes are heading higher.

A daily close below the 100-day MA at 2758 would give a failure to follow through signal and possibly generate the same kind of action to the downside that was seen to the upside this past week. A daily close above 2835 would likely cause the index to go up to the 2887 level increasing the chances the index would break it as the double top would turn into a triple top, causing the index to attempt reaching the 3000 level within the next couple of weeks.

Chart probabilities favor the upside, while common sense suggests some upside but more downside this coming week. Possible trading range is 2840 to 2758.

SPX Friday closing price - 1339

The SPX, much like the other indexes, blew past decent resistance levels this past week and ended closing near a daily and weekly close resistance level at 1343 that has been important for the past 5 months, suggesting that if there is decent follow through to the upside, that the index will end up making a new 34-month high and reaching the 1400 level.

The SPX is likely to be the key index this coming week simply because it is the only index that shows decent to perhaps strong resistance "nearby" and also because the largest portion of traders use this index as the main index in their charting evaluations. In addition, much of the rally this week had to do banking issues as the Greek default was prevented and though that is not supposed to be a positive (simply a negative averted), it was the driver that caused this strong rally to occur. As such, the important resistance level nearby should be a good indication of just how much that event actually helped the market.

On a weekly closing basis, resistance is decent at 1343 and decent to strong at 1363. On a daily closing basis, resistance is decent at 1343, minor at 1357 and strong at 1363. On a weekly closing basis, support is minor at 1319, minor again at 1279 and decent at 1268. On a daily closing basis, support is minor at 1328, minor to decent at 1316, and minor again at 1305. Below that level, support is decent to strong between 1256 and 1268.

The SPX stopped at 1343 the second week of February and did not break that level until 10 weeks later. It was a level that held some technical strength inasmuch as it was also a perfect 75% Fibonacci retracement number. That level proved its strength again 5 weeks ago when the index dropped down to 1311 and gave a failure to follow through signal, and then generated a rally back up to 1345, before heading down to 1258. Simply stated the 1343 to 1345 level has proven to be an important resistance level this year and is not likely to get broken unless the fundamentals are strong enough to support a renewal of the uptrend. It is therefore unlikely that before the earnings report quarter begins that the bulls would have that much strength. With the resistance level only 4-6 points above Friday's close, it suggests that the index will show much more red than green this coming week as last week's trading range was 74 points, suggesting that if only 50% of that range is seen this coming week, that a trading range between 1305 and 1343 would be likely, if an when the resistance level holds.

Like with the other indexes, the SPX broke above its 50 and 100 day MA, currently both at 1316, and is likely to test those lines sometime this week before deciding what it is to do overall.

The SPX has consistently been the laggard inasmuch as the large portion of what has ailed the market over the past 3 years has been the banking industry. Those problems persist and that certainly was evident one more time with Greece being on the verge of a default, which would have likely been a domino-like catalyst in the banking industry. Greece is just one of several countries that are having banking problems this year and until that gets resolved, the index will continue to lag. As such, whatever the index does this week, especially to the upside, will likely be indicative.

The mood in the market turned on a dime this past week from bearish to bullish. Fundamentally speaking, the news itself was not as positive as the action suggests it should have been, but then again the market was not expecting such action and surprise often leads to atypical movement. A wake-up call might be in order this coming week as there will be a full complement of brokers by mid-week and the market now finds itself in an overbought, or overextended condition that likely requires more positive fundamental news to feed on to go further. Nonetheless, from a purely chart point of view, further upside of consequence should be seen.

The economic calendar this week is bereft of news of consequence until the end of the week. Nonetheless, the Jobs report as always is important and that is due out on Friday. On Thursday, the weekly Initial Claims report as well as the ADP Employment Change is due out and they could have some minimal impact. Nonetheless, generally speaking the indexes are likely to maintain most of the upward movement seen last week, though some of the advance might be pared during the week.

With no news due out, much of the action until Friday's economic reports will be determined by what the indexes do on Tuesday. If there is upside follow through on Tuesday, especially on a daily closing basis, the domino-like effect could continue and the bulls could keep the momentum going to the upside and accomplish what they have not been able to accomplish the last 2 months. The momentum is very strong and that is always difficult to stop. Probabilities favor a choppy week with more red than green, but that would likely change if the indexes keep the 5-day green close rally going.