DOW Friday closing price - 12772

The DOW was unable to confirm last week's mini breakout above last year's weekly high close generating a reversal signal by making a new 7-week intra-week high and then closing in the red and below 12810. The index closed near the lows of the week and further downside is expected to be seen this coming week. The reversal has to be considered indicative inasmuch as it came off of fundamentally bad news which will require the opposite amount of good news to negate.

On a positive note, the DOW did not go far enough to the downside to generate a sell signal on the weekly chart as a close below 12640 would have been needed for that to happen. As such, the door was left open for the upside if the earnings quarter that begins on Tuesday (after the close) shows that companies are still generating better-than-expected earnings results.

On a weekly closing basis, resistance is very minor at 12767, minor to decent at 12810, minor to decent again at 12880 and minor at 12982. On a daily closing basis, resistance is minor to decent at 12837 and decent at 12943. Above that level, resistance is decent at 13005, minor at 13115, and decent to strong between 13252 and 13279. On a weekly closing basis, support is minor at 12640, very minor at 12479 and at 12369. Below that level, minor to perhaps decent support is found at 12118. On a daily closing basis, support is decent at 12715.12724 and decent again at 12502. Below that level, support is minor to decent between 12369 and 12411.

The DOW was hit with negative fundamental news as both the ISM Index report and the Jobs report came in lower than anticipated. The results signal that the economy is beginning to contract and that growth is coming to a standstill. Nonetheless, it can be said the index actually did well in the face of the strong negative news as support levels of importance were not broken after the disappointing news. It does seem the traders will now be keying on the earnings reports that come out over the next 3 weeks before making a more definite decision on the direction of the index for the next quarter. By the same token, the momentum the bulls had gained in the previous 4 weeks has been lost and the traders will need to see some new signs of improvement before purchasing of consequence resumes.

On a chart basis, it can be said that the DOW fulfilled the upside chart objective of getting up to the 13000 level with a rally this past week to 12961. Nonetheless, having held above the decent support at 12700 and now facing the first 3 weeks of the earnings quarter, which are generally supportive to the bulls, suggests the index has not yet seen a high to this rally. It should be mentioned that a congestion pattern or this kind was also seen in Feb/Mar when the index traded between 12685 and 13055 for a period of 3 weeks. The probabilities favor the same kind of trading being seen now as the economic reports suggest some selling will be seen while the beginning of the earnings quarter usually brings about some rallies.

Support in the DOW is decent between 12685 and 12700. With the index closing in the lower half of the day's trading range and with a spike-type drop, the probabilities favor the 12702 low seen on Friday being broken. Nonetheless, the traders were unable to push the index lower than 12702 on Friday in spite of the negative report and there is a good possibility that even if the low is broken on Monday (likely) that the index will not get below 12685. If the index does break below 12685 in an indicative way, there is no support until 12450 is reached, which by the way is also where the 200-day MA is currently located. The index did generate a late-day rally of 70 points from the low on Friday and that does indicate the traders will likely be trading the index based on the chart, at least until the earning reports of importance start coming out (Thursday afternoon).

Minor to decent resistance in the daily chart of the DOW is found at 12898 which was the high seen 2 weeks ago prior to the rally, and at 12961 which was the high seen last week. On the intra-day chart, though, the 12800 level does show some resistance as well as being a pivot point. A break above 12961 will likely take the index up to 13055 at some point in the next week or two.

The traders seem to have put aside for now the negatives of the economic reports seen this past week. If those economic reports are confirmed next month with similar numbers, the market will likely take it very negatively, but for the next 3 weeks the probabilities favor a sideways to slightly higher bias as traders are expecting good earnings numbers. Monday is likely to be important for the technical traders with 12800 being a pivot point and 12685 being an important support level on the chart.

NASDAQ Friday closing price - 2937

In spite of negative economic news, the NASDAQ was able to generate another green weekly close suggesting that the index has not yet found a high to this rally. The index generated a 2987 high this past week which can be considered a retest of the 3000 level, much like the 12961 high in the DOW and the 13000 level there, but that falls slightly short of actually reaching the objective. Having closed green on a weekly closing basis, the probabilities of 3000 being seen this week, or at the latest the following week, are high.

On a negative note, though, the NASDAQ did close near the lows of the week suggesting that further selling will be seen this week and that the index will get below last week's low at 2921 putting the 2895/2900 support level at risk of being broken. If that support gets broken the probabilities will increase that a high to this rally has been seen and that the test of 3000 was successful. The fact the index continues to lead the market to the upside suggests the traders are still leaning on the bullish side and that they will wait until the first 3 weeks of earnings reports are out before considering any change of direction.

On a weekly closing basis, minor resistance is found at 3000, minor to decent at 3069, and decent to strong at 3091. On a daily closing basis, minor to decent resistance is found at 2976 and again at 2988. Above that level, decent resistance is found at 3069 and strong at 3122. On a weekly closing basis, support is minor at 2873, minor again at 2778 and minor to decent at 2747. Below that level, support is minor at 2686, minor to decent at 2643 and decent at 2616. On a daily closing basis, support is minor to perhaps decent at 2910, minor but perhaps indicative at 2870, very minor at 2849, and decent at 2836.

The NASDAQ did generate a red day and close near the lows on Friday and is likely to see further downside at the beginning of the week. The index does show a gap from Monday between 2855 and 2895 that could be a breakaway gap and which is likely to get tested at some point this week. The gap is worrisome to the bears inasmuch as it is a "viable" gap coming off of news and breaking above the 50-day MA, which is always an important line. The 50-day MA is currently at 2894 and a retest of that line is expected. By the same token if the retest is successful it will add strength to the bullish case. Additional support in the index is found at 2900 from an important low seen on March 6th at that price. Simply stated, at this time and with the earnings quarter reports just beginning to come out, the area between 2894 and 2900 should be considered decent and indicative support. Closure of the gap at this point would be considered a bearish statement.

To the upside, the NASDAQ does show some minor resistance at Friday's high at 2957. The resistance comes mostly from the 100-day MA which is currently at that price. Additional minor resistance is found at 2942 and at 2960 from a couple of previous highs of some consequence (not much consequence) that will add a bit of strength to that area. The stronger resistance is found at last week's high at 2987 and again at 3000.

The NASDAQ continues to outperform the other indexes and that is indicative as the NASDAQ has led the market to the upside during the past 4 years during those times there was "general" bullishness in the market. During periods where there was worry about the health of the market but a rally was under way, the leadership would fall to the DOW and the safety of Blue Chip stocks. The NASDAQ leading the parade has to be a worry to the bears. By the same token, should that leadership change it would likely be indicative of true weakness being seen.

As far as the charts are concerned, the NASDAQ having made a new 2-month high suggests that at the very least that high will need to be tested before aggressive selling is seen. By the same token, the 2987 high is not likely to stand up as a high to the rally as the 3000 level still beckons with a fair degree of strength. Not only is 3000 a psychological resistance that works as a magnet but it is also the location of the runaway gap to the downside between 3016 and 3001 that was seen on May 4th and that the traders want to test to see if that runaway gap is still valid. If it is, aggressive selling will be seen. It can be said the rally up to 2987 suffices from a purely technical perspective, but then again with 3 weeks of earnings reports of consequence coming over the next 2 weeks, including NASDAQ stocks of importance such as AAPL, GOOG, AMZN, and PCLN it is unlikely the traders will aggressively sell the index until those reports come out. As such, testing the actual 3000 level is still a high probability.

The probabilities are high that the NASDAQ will be trading between 2895/2900 and 3000 for the next 2 weeks. Which level is seen first is a question that is difficult to answer. Nonetheless, with the big 2 economic reports of the month already out and the market not breaking down because of the disappointing results, there seems to be little to stop the traders from trading technically and not fundamentally for now.

SPX Friday closing price - 1354

The SPX closed in the red on Friday making last week's close at 1362 into a successful retest of the high weekly close last year at 1363. The red close does suggest the rally is over and that the indexes will be heading down from here. Nonetheless, the red close will need to be confirmed with another red close next Friday before the traders will jump in on the bear side.

The SPX continues to be indicative of the health of the financial industry, which in turn will likely determine the health of the world economy. With no details given yet as to how and with how much financial help the European nations will support their imperiled banks, the index remains an anchor and an indicator of what the indexes will do in the near future.

On a weekly closing basis, resistance is decent to strong 1363 and minor at 1370. Above that level, resistance is decent to strong at 1403 and strong at 1408. On a daily closing basis, resistance is minor to decent at 1370 and decent at 1374. Above that level, resistance is minor at 1390, decent at 1405 and strong at 1419. On a weekly closing basis, support is minor at 1335 and decent 1278/1279. On a daily closing basis, support is minor to decent at 1343. Below that level, minor support is found at 1325 and again between 1305 and 1308.

On Friday of the previous week the SPX closed on the highs of the week at 1362 and the expected follow through was seen at the beginning of the week taking the index up to 1378 and several closes above last year's daily closing high at 1363, suggesting that further upside and a rally up to 1400 would be seen. Nonetheless, the bulls failed to accomplish the expected rally stopping at the minor daily close resistance from March at 1374 (which was not expected to hold the index down) and breaking below a decent intra-week support at 1358 (fell to 1348) suggesting the rally is over. The index also gave a small failure signal having closed on Friday below the high daily close from June 19th at 1358.

It cannot yet be said with any certainty that the SPX is heading lower as the index would have to generate a close below 1343, which has been a pivot point for the last year. Nonetheless, it is evident that the bulls need some strong and positive fundamental news to re-generate buying interest in order to take out the 1378 level (1374 on a daily closing basis) which has gone from minor resistance to decent resistance based on the action seen this past week. Intra-week resistance this coming week will be found in the SPX at 1363 and at 1378. The resistance at 1363 is further strengthened by the 100-day MA which is currently at 1360. A break above 1378 will likely push the index up to the 1394/1400 level.

Support is found at 1340/1343, which also includes the always important 50-day MA, currently at 1339. A close below 1340 will likely push the index down to the 200-day MA, currently at 1300.

The SPX will be the first index to receive the bulk of important earnings reports with JPM and WFC reporting on Friday. Further reports of consequence will come out the following week with CIT reporting on Monday, GS on Tuesday and BAC on Wednesday. It is evident by the earnings schedule that the index will be the first to give clues as to the continuing health of the U.S. banking industry. As such the index close next Friday, after JPM and WFC report, will be closely watched.

The market got a bucket of cold water thrown on it after the important economic reports signaled the possible contraction of the economy as well as slowing of Jobs growth. Due to these reports, the attention shifted once again to the U.S. and away from Europe's positive agreement regarding help to its beleaguered banks. Nonetheless, the idea that U.S. companies are still growing positively and that it will be shown in the earnings reports that start on Tuesday, as well as the thought that perhaps the negative economic reports were a 1-month phenomena, kept the markets from falling aggressively.

Attention will now shift to earnings as AA kicks off the earnings quarter on Tuesday after the close. Over the next 3 weeks 90% of the important companies report earnings and on the third week the ISM Index report as well as the Jobs report will come out again to either confirm or negate the numbers that came out last week. Should the earnings fall short of expectations and the economic reports confirm the contraction in the economy the indexes it is likely the market would fall strongly in August.

This coming week, after the bulls were able to "dodge a bullet", it is likely the market will be choppy and trading sideways with perhaps a slight upward bias, at least until Friday morning when the first of the important financial sector earnings reports come out.