DOW Friday closing price - 12294

The DOW ended up having a strong reversal week having gone below last week's low and then rallying to go close above last week's high. In the process, the index also broke and closed above the high for the last 5 months at 12284, suggesting that the May and July highs up 12876 and at 12753 respectively may now be targeted. The rally, likely to be seen as a Xmas rally, should see some decent follow through this coming week as there are few fundamental reasons right now for the sellers to "step up to the plate" while the holiday recess continues. Nonetheless, the rally for the week was done with very low volume and sparse participation (4th lowest in the past 4 years) and could run into some trouble continuing upward after the traders come back from the holiday pause.

On a weekly closing basis, resistance is minor to decent at 12391, decent at 12682 and decent to strong at 12810. On a daily closing basis, resistance is decent between 12391 and 12345, minor at 12569, decent to strong at 12724 and strong at 12810. On a weekly closing basis, support is minor at 11934 and decent between 11858 and 11866. On a daily closing basis, support is minor between 12186 and 12201, minor again at 11897 and minor to decent at 11766.

The DOW will continue to see very low volume and participation this coming week but the short-term momentum has shifted to the upside and unless something unexpected comes out this coming week, the probabilities suggest that further upside will be seen. There are no economic reports of consequence due out this coming week and it is unlikely that something of consequence will occur in Europe as well.

The DOW will start running into decent resistance between 12393 and up to 12450. Those were the highs seen in February and March and from which decent corrections occurred. It is unlikely that without some strong fundamental positives, as well as with greater trader participation, that the bulls will be successful in breaking those "previously established" resistance levels, especially since they were established when the fundamentals were bullish and the bulls had control of the market. Nonetheless, having broken the July resistance on Friday, the probabilities of the index getting up to that area this coming week is high.

To the downside the 200-day MA, currently at 11940, is likely to be strong support during the next few weeks until the earnings reports start coming out. Nonetheless, it is highly doubtful that there will be enough selling this coming week to take the index down to that level. The 12153 to 12231 area does show a total of 5 previous high daily closes as well as 1 previous daily low close in May at 12201. As such, with the breakout that was seen on Friday, it is highly likely that any correction this week will find good buying in that area.

Though last week the DOW did show a 562 point trading range, it is unlikely that trading range will be duplicated this week. A trading range like what was seen 3 weeks ago of 291 points is the most probably and considering that the 12393/12450 level is the upside target, it could mean the 12150-12200 area will be the low for the week.

The probabilities do favor further upside this week with most of it happening around the first part of the week. Based on the monthly and weekly charts, the close next Friday should be no higher than 12391 and no lower than 12262.

NASDAQ Friday closing price - 2618

The NASDAQ did not accomplish as much as the DOW did this past week as it was unable to generate the kind of a rally seen in the other index, signifying that the rally was not broad based but simply an end of the year seasonal event where money mainly flowed to the security of Blue Chip stocks. The index did accomplish getting back up to what has been an important pivot point throughout the year at 2616 to 2622, suggesting that at least for this coming week the sellers will not be aggressive. By the same token, the index was unable to get above July's high at 2753 or even above the high the first week of December at 2674, suggesting that this rally is meaningless at this time.

On a weekly closing basis, resistance is decent at 2646, minor to decent at 2706/2707, and decent to strong at 2737. On a daily closing basis, resistance is minor at 2655, minor to decent at 2667, decent at 2687, and strong between 2727 and 2738. On a weekly closing basis, support is minor at 2555, decent at 2441 and at 2415 and strong at 2341. On a daily closing basis, support is minor to decent between 2596 and 2606, minor at 2539 and minor to decent at 2518.

The NASDAQ is facing quite a bit of resistance above starting with the 50-day MA, currently at Friday's closing price of 2618, a "3-point" trendline using December 5th high as the starting point at 2632, a couple of minor previous intra-week highs at 2643 and 2653 and the 200-day MA, currently at 2662. In addition, December 5th's high at 2674 has to be considered decent to strong resistance. The amount of resistance above is likely to prove impossible to break without some fundamental help, especially on a week where no economic reports of consequence are due out.

To the downside, the NASDAQ does show decent support at the 2596/2600 level, further support from an intra-week low of some consequence as well as from the 100-day MA, currently both at 2555, and at the low seen last Monday at 2518. It should be mentioned that the 2518 low seen on Monday was also where the 100-week MA is currently at. With the index having closed on the highs of the week, it is highly unlikely that the 2518 level will be seen this coming week.

The probabilities suggest that further upside will be seen this coming week. Taking into consideration the upside objective in the DOW of 12393/12450, the NASDAQ should get up to around the 2643/2653 level. Nonetheless, the 3-point trend line that started on December 5th is presently at 2632 and there is a good chance that if the index continues to underperform the DOW that it will stop at that line as that is a valid line having 3 established points on it.

The NASDAQ has now had 2 inside weeks in a row as well as 7 out of the last 8 weeks having been red. The probabilities do favor another green week but the reality is that the index continues to be in a downtrend and unlike the DOW that has accomplished "something" to the upside, the NASDAQ has been basically playing a defensive game.

SPX Friday closing price - 1265

The SPX has begun to shed its mantle of weakness as the index is now starting to outperform the NASDAQ, suggesting that the worry about the European banks may be starting to wane. The index was not able to break above the July highs or even above the early December highs, but it was able to close above the 200-day MA, currently at 1260, and come within 2 points of the December highs while closing on the high of the day/week and promising that those highs will be broken as early as Tuesday morning.

On a weekly closing basis, resistance is minor to decent at 1268 and decent at 1285. On a daily closing basis, resistance is minor at 1275 and decent to strong at 1285. On a weekly closing basis, support is minor at 1219, decent at 1158 and at 1131 and decent to strong at 1123. On a daily closing basis, support is minor to decent at 1256 and minor to decent again between 1212 and 1218. Below that, no support is found until decent support at 1158.

The SPX was able to generate a green close from last week's close at the important 1218 level (closed the previous Friday at 1219) and that likely means that the index will take out the 2 most recent highs at 1265 and at 1277 which are not considered very important. Nonetheless, October's high at 1292 may not be broken as that level of resistance includes three previous lows from February, May, and July which were all between 1294 and 1295, suggesting that chart level is very meaningful to the traders. As such, further upside should be seen this coming week but no strong bullish statement is likely to be seen. In fact, if the index is able to get back up to the 1292/1295 and fail, it could be considered a strong bearish statement. For that reason alone, the SPX could be the index to watch regarding what the traders think will happen in January.

Support in the SPX will now be decent between 1256 and 1262, which is an area that included a previous intra-week low of consequence as well as the 200-day MA. With the index closing at 1265 on Friday, this likely means that very little red should be seen this coming week. Should the index close below the 200-day MA, and more importantly trade below 1256 then weakness is likely to return with a possible downside objective of 1200. Nonetheless, the way the chart looks at this time that is not a high probability. The SPX will probably trade calmly this week but with an upward bias and keeping an eye on 1292. Possible trading range for this week is 1256 to 1292. Any deviation from that would probably be indicative.

The indexes are likely facing end-of-the-year doldrums this coming week and the trading is likely to be slow and volume-less. Nonetheless, the short-term momentum is to the upside and further appreciation, though likely limited, is expected to be seen for the rest of the year (4 trading days). There is no news of consequence scheduled to come out this week and traders are more likely looking to buy after-Xmas-specials as well as return their unwanted gifts than buying or selling stocks.

Nonetheless, the indexes will be closing out the year on a positive note as they are much closer to the highs of the year than the lows and that suggests that further upside will be seen at the beginning of the year. For that reason alone it is more probable that if there are any surprises this week that it will be to the upside rather than to the downside. Expect positive action this coming week.