DOW Friday closing price - 11103

The DOW broke down early in the week but managed to generate a reversal signal having made a new 30-month low at 10404 but closing in the green and near the highs of the week, suggesting that further upside will be seen this coming week. Based on the 800+ point bounce from the low and the close near the highs of the week, the index could get up as high as 11867 this coming week if only technical trading is involved. The fundamentals don't suggest that is a viable objective this week and therefore it is possible the index will not follow the technical probabilities and get above last week's high in spite of the close near the highs of the week favoring such a scenario.

On a negative note, the DOW closed below the 100-week MA, currently at 11170, in spite of having traded above that level for most of the day on Friday. In addition, the index showed a reversal day on Friday having made a new 6-day high, getting up to the 50-day MA, currently at 11235, but closing in the red and on the lows of the day, suggesting the first course of action for the week will be down. With the weekly chart saying higher, but the daily chart saying lower the discrepancy seems to imply that much will depend on news and not on technicals. By the same token, with no news due out on Monday and Tuesday, the last action of the week was negative so the index should be moving lower to start the week.

On a weekly closing basis, resistance is minor at 11284 and again at 11444. Above that level, resistance is decent at 11509. On a daily closing basis, resistance is minor at 11132, minor again at 11153 and minor to perhaps decent at 11190. Above that level there is decent resistance between 11444 and 11509 and decent to strong resistance at 11613. On a weekly closing basis, support is minor at 10817 and minor to decent at 10771. On a daily closing basis, support is minor at 10992, and minor to decent between 10715 and 10817. Below that level there is decent support at 10655.

The DOW now shows 2 successful retests of the 200-week MA, currently at 10652, but has yet to generate a bounce high enough to give any kind of buy signal suggesting the index is "marking time" until the earnings report quarter begins to show a clearer picture of how the drop in GDP has affected earnings or until the problems in Europe get better defined. All the momentum to the upside seen during this past week in the DOW is now gone as the traders await further news.

The DOW rallied in excess of 800 points last week after making the new 13-month low but did not retest the lows at any time, making it unlikely that traders will buy aggressively until that occurs, or until some fundamental report comes out showing that the rally was well-founded. As such, the beginning of the week should see much more red than green as support levels are sought. In addition, the lack of a successful retest of the lows, as well as a lack of tangible fundamental evidence that problems in Europe have been resolved suggests there will be no follow through to the upside this coming week, as the weekly chart suggests. On the other side of the coin, with the strong reversal signal given getting below last week's low at 10404 is also unlikely, making this week likely to be a rare inside week (lower highs and higher lows) with nothing being decided.

As far as supports are concerned, on a daily closing basis the first level of support found is at 10992. This level is considered very minor support but since it is within the demilitarized zone the traders may give it a bit of importance. Below that level, there is nothing until the 10817 level is reached, and even then that support must also be considered minor. Stronger support is found between 10719 and 10733 as those 2 levels were the strong support prior to the break seen a week ago Friday. The last level of support is the 13-month daily closing low at 10655 made on a week ago Friday, from which the index generated the failure to follow through signal that helped the bulls run up the index this past week.

An intra-week drop back down to the 10929/10932 level is highly likely to be seen as early as Monday. That is the closest level of support and therefore likely to be seen as traders seek those levels where buying will be found. The next level of intra-week support is at 10801/10824 and it is a bit stronger but still considered somewhat minor as it has been broken on 2 occasions over the past 4 weeks. The stronger support is found between 10604 and 10597 and it is one that is likely to hold up if reached, especially if reached on Monday or Tuesday, as the traders are not likely to break that level after the reversal seen last week without some additional negative news. The 10597/10604 level is not likely to be seen on Monday under any circumstances but if the DOW does close on its lows on Monday, and especially if it closes below 10992, then the 10600 level would be highly reachable for Tuesday's action. Nonetheless, even if the 10600 level is seen on Tuesday, the probability of the index closing anywhere below 10719 on any day this week is very low.

As far as intra-day resistance is concerned, Friday's high at 11232 (11190 on a daily closing basis) should be strong resistance at the beginning of the week. Any close above the 50-day MA, currently at 11235, will likely take the index back up to the stronger resistance that is found between 11444 and 11529. If all of that happens, the door would open for the 11867 level to be reached. Nonetheless, the probabilities of that happening without some positive fundamental news are extremely low.

The DOW will turn some of its attention to the earnings reports due out this week. Even then there are only 3 earnings reports of any consequence and the first one due out on Tuesday afternoon after the close, which is AA, has lost some of its predictive value. As such, the index is not likely to see any special action until Thursday when JPM comes out in the morning before the market opens and GOOG comes out after the market closes. These reports are but the tip of the iceberg and if there are no big surprises in these reports the index is likely to continue trading in the mentioned above trading range until the following week where many of the strong economic reports are due out.

Unless there is some news that comes out of Europe this coming week, or big surprises in the GOOG and JPM earnings reports, the probabilities favor the DOW trading between 10600 and 11200 and having an inside week. Having closed on Friday at 11103, it means there is likely to be a lot more red than green this coming week, at least at the beginning of the week. Nonetheless, in looking at the weekly closing chart there is a good chance the index will close next Friday in the green, possibly around the 100-week MA at 11170. That means another volatile week with strong down movement at the beginning of the week and a recovery at the end of the week.

NASDAQ Friday closing price - 2479

The NASDAQ also gave a reversal signal this past week making a new 12-month low but closing in the green. Further upside is expected to be seen with a potential upside objective of reaching the 50-week MA, currently at 2670. Nonetheless, the leadership of the index in the market was not seen this past week (NASDAQ up 2.5% - DOW up 5%) and therefore it can be said that the rally is suspect and that the index will not see the follow through that would normally be expected, technically speaking. The index also failed to close above the 100-week MA, currently at 2480, that was broken the previous week suggesting that the rally was mostly short-covering and very little new buying.

The NASDAQ, like the DOW, got up to the 50-day MA, currently at 2512 and backed off to close in the red and near the lows of the day on Friday, suggesting that the MA line is being respected by the traders at this time. The reversal seen on Friday likely means the index will head lower on Monday thus putting the positive outlook of the weekly reversal in doubt and probably needing additional positive news to go any higher.

On a weekly closing basis, resistance is minor at 2479, decent at 2530 and decent to strong at 2622. On a daily closing basis, resistance is minor at 2506, decent at 2546 and at 2579 and decent to strong at 2622. On a weekly closing basis, support is minor at 2415 and decent at 2341. On a daily closing basis, support is decent between 2455 and 2467, minor at 2357 and decent at 2341.

To the upside, the NASDAQ shows what seems to be a brick wall on the weekly closing chart at 2528/2530. The fact the index failed to even get up there intra-week this past week seems to be an indication that not only the leadership of the market is no longer in the index but that the buying this week was mostly short-covering. The NASDAQ has consistently over the past 3 years been the leader and pace setter in breaking down resistance levels but the failure to even test the resistance while on a "major" short-covering rally seems to indicate that the inherent weakness seen at the beginning of the week is still there.

It is evident, as such, that Friday's high at 2512 is going to be an important pivot point for the week. Like with the DOW, the NASDAQ also shows a dichotomy between the weekly and daily chart where the weekly suggests further upside and the daily suggests weakness to be seen.

If the NASDAQ is able to get above 2512 it will run into decent intra-week resistance up between 2555 and 2562. Nonetheless, on a weekly closing basis it will be difficult for the bulls to generate a close above the decent to strong resistance at 2528/2530. Above 2562, decent resistance will be found again at 2590 and a bit stronger up between 2630 and 2643. If the weekly chart outlook based on the reversal and close near the highs of the week were to happen, a rally all the way up to the 200-day MA, currently at 2695 would occur. Probabilities of fulfilling the weekly chart objective are extremely low unless some strongly positive fundamental piece of news occurs.

To the downside, the NASDAQ shows decent support on the daily closing chart between 2455 and 2467 as the index show 4 previous low daily closes in that area 10 months, with 3 of them occurring in the last 4 weeks alone. Nonetheless, a close below 2455 shows a big vacuum until 2357 is reached. This likely means that not only is the 2455 level decent support but that any break will likely cause the index to drop 100 points in a very short period of time, perhaps even all in 1 day. There is some support at 2414/2415 from a previous intra-week low as well as the fact that 2415 was the low weekly close a week ago last Friday, which likely means the traders will not aggressively sell unless that level is broken as well as the one at 2455. The strong support, of course, is seen down at the 2337 level where the index showed 3 previous lows of consequence before last Monday's break down to 2298. It is unlikely that the 2337 level will be broken without some negative news being seen.

Like the DOW, the probabilities of the NASDAQ having an inside week this coming week are high. A 2506 down to 2337 trading range seems to be a good possibility.

SPX Friday closing price - 1155

The SPX continues to be the weak sister among the indexes and this week was no different as the index was the only one of the 3 that actually got down to the level where a recession signal can be given. A recession signal will be given if the index "closes" below 1090 but the fact that the index traded as low as 1074 this past week suggests that it won't take much to make that signal happen as "any" bad news of consequence could trigger that occurrence.

In addition, the SPX has been straddling the 200-week MA for the past 8 weeks having generated a total of 3 weekly closes below the line and 5 closes above the line during this period of time. The inability of the index to establish itself above or below the line points to uncertainty among the traders as to the direction for the rest of the year but it also suggests that the possibilities of a recession occurring are no less that 50-50 and that the market is hanging by it fingertips hoping that the earnings and economic reports to be seen during the next 3 weeks show some recovery is occurring. If that does not happen, watch out below.

On a weekly closing basis, resistance is minor at 1176 and decent to perhaps strong at 12171218. On a daily closing basis, resistance is very minor at 1164, minor at 1177, minor to decent at 1204 and decent to perhaps strong at 1216/1218. On a weekly closing basis, support is minor at 1131 and decent at 1123 and then nothing until decent support is found between 1064 and 1066. On a daily closing basis, support is minor at 1129, decent between 1119 and 1121 and decent to strong at 1098.

The SPX continued to show small signs of failure this past week even though the index, like the others, generated a reversal week making new 12-month lows and closing in the green and near the highs of the week. Nonetheless, unlike the other 2 indexes, the SPX did not get up to the 50-day MA, currently at 1176 and also failed to close convincingly above a "minor" daily close pivot point at 1155, strongly suggesting that the index will be on the defensive this coming week, especially when being compared with the other indexes.

To the downside, the SPX does have an intra-week pivot point/support level at 1135 that is likely to give traders a "heads up" on what direction to play during the day/week. An intra-day break below 1135 will bring the 1114 and 1101 levels as immediate objectives. Nonetheless, as with the other indexes, it is unlikely that the SPX will be breaking last week's lows at 1076 and that the 1101 level could be the objective to the downside in the minds of the traders.

To the upside, Friday's high at 1171 will likely be decent resistance but if broken, the SPX will run into decent resistance at the 50-day MA, currently at 1176, as well as from weekly closing resistance at that level as well. Further resistance will be found at 1195, 1220 and the strong one at 1230.

Though the possibility of an inside week occurring, like with the other indexes, the possibility of the index getting above last week's high at 1171 and getting up to the 1176 level does exist. Nonetheless, that would require that the index be the strong sister this week and the probabilities of that occurring are very low. Nonetheless, even if that unlikely event occurs, as long as the index stays below 1176 on a daily closing basis, the chart will continue to look bearish.

The action last week, as impressive as it felt, did not accomplish anything bullish whatsoever suggesting that all the traders did was short-cover their positions. The attention this week will start to turn to earnings reports and the effect that the slow-down in the economy has had on business over the past 3 months. The European problems will still hang over the market and have impact but with that likely being tabled for a couple of weeks more, the traders are likely to pin their attention on earnings. Nonetheless, this coming week will not have many earnings reports of importance with only 3 of minor to decent importance coming out during the week (AA, JPM, and GOOG). As such, if there is no news from Europe, the probabilities favor a choppy market with a slight downward bias in which last week's breakdown lows will be tested.

The weekly and daily charts of all the indexes offer completely different scenarios for the week with the weekly charts offering further upside of consequence, while the daily charts suggesting weakness and a retest of the recent lows. Based on the fundamentals in place right now, I would venture to say the daily charts will likely be the victors in predicting what will happen this week. With few probabilities of catalytic news coming out this week, it is likely the trading will be choppy and generally directionless but with a slightly higher probability of downside due to the fact that the 13-month lows made last week should be tested before traders can gain technical confidence to buy more aggressively.