DOW Friday closing price - 12822

The DOW generated a green weekly close on Friday but it was considered an uneventful close as it was at the 12810 pivot point/resistance/support level that has been in place for over 17 months, leaving the traders without a clear chart clue as to what direction the market will take this coming week. The index did keep the recent uptrend intact having made a new 10-week intra-week high maintaining the probabilities favoring further upside. By the same token, the inability to generate follow-through to the new intra-week high seen on Thursday, as well as closing below the 12880 weekly closing high seen 3 weeks ago does suggest the traders are not convinced that that further upside is a high probability.

The DOW did accomplish reaching the 13000 level by rallying this past week to 12977 (bottom of the demilitarized zone). Getting up to this level (12970-13030) was a very high probability once the index got above last year's high at 12876 3 weeks ago. Nonetheless, having accomplished what was expected leaves the bulls without a technical "crutch" they can rely on for further rallies and makes this coming week important due to the huge amount of important earnings reports coming out.

On a weekly closing basis, resistance is minor to decent at 12880 and minor at 12982. Above that level, no resistance is found until decent resistance at 13228. On a daily closing basis, resistance is minor at 12837 and decent to perhaps strong 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 very minor at 12977, 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 minor to decent at 12715, decent at 12573 and decent again at 12502. Below that level, support is minor to decent between 12369 and 12411.

The DOW began to show signs on Friday that the traders are now starting to lean toward the downside. The index not only failed to follow through to the upside on Thursday when new 10-week intra-week highs were made but closed that day at 12943 which was the same close seen on July 7th. The red close on Friday makes both of those closes into an ominous double top that if confirmed with a close below the most recent low close at 12573 would bring in heavy technical selling to the index.

The technical action seen this past week has set the stage in the DOW for a boost to the upside if the double top is negated or for a strong push to the downside if follow through below the recent low at 12492 is seen. The traders will be basing their decisions this week on the array of earnings and economic reports due out, which include AAPL, FB, CAT and NFLX as well as Durable Goods and the always important GDP-Adv.

The DOW closed on the lows of the day on Friday and further downside should be the first course of action on Monday. There are no economic reports due out until Wednesday and on the earnings front the reports Monday morning before the opening are not likely to have much of an effect, as such, Friday's lack of buying should weigh on the market on Monday. The index did close below the 100-day MA, currently at 12840, and on the daily chart there is no support of consequence until 12715 is reached, as such, a drop down to that level is likely to be seen. In looking at the 60-minute chart, there is some minor support at 12795/12800, which does include the 50 and 100 60-minute MA's. Nonetheless, should those be broken (likely due to the action on Friday) the next support is the 200 60-minute MA, currently at 12710. Based on both chart, the probabilities of the DOW getting down to 12700-12715 on Monday are high.

To the upside, the DOW shows resistance at the 2 most recent highs found at 12898 and at 12961. Having given a failure to follow through signal on Friday on the daily chart, those resistance levels will play an important part this coming week, more so after Monday than Monday itself. Above those levels, this week's high at 12977 and up to 13055 (the high seen on 2/29) will be resistance.

The DOW is facing what could be an important week based on the fact that important earnings and economic reports are due out. In addition, it can now be said that technically upside objectives have been accomplished and that no further technical action is needed, which does free the traders to rely mostly on fundamental information that up to now they have been shrugging off. Chart parameters show resistance to be at 13055 and support at 12492. Trading inside that trading range can be seen without any major change occurring. Trading outside of that range will be indicative, especially if the 12492 support level is broken.

My thoughts are that the earnings reports will be positive but not to the extent to generate any new buying and that the economic reports will continue to be worse than expected, and that by the end of the week after all is said and done that the DOW will be heading lower.

NASDAQ Friday closing price - 2925

The NASDAQ attempted to rally above the previous intra-week high at 2987 this past week but unlike the other indexes that were successful in getting above their previous intra-week highs the NASDAQ was unable to accomplish that feat. The index rallied up to 2976 which is where the 3-point trendline that started in March at the 3134 is presently located and if the index gets below this past week's low at 2871, the 3-point trendline will get stronger as it will have 4 points on it.

The NASDAQ did show some leadership abilities at the beginning of the week suggesting the rally might be turning generally bullish but by Thursday, when the strength of the week's rally was at its peak, the leadership began to falter and on Friday the index seemed to be leading the way down, suggesting that the traders were feeling disappointed once again.

On a weekly closing basis, minor resistance is found at 2937, minor again at 3000, minor to decent at 3069, and decent to strong at 3091. On a daily closing basis, minor resistance is found at 2930, minor to decent resistance is found at 2965 and now decent resistance is found at 2976. Above that level, minor to decent resistance is found at 2988, decent resistance is found at 3069 and strong at 3122. On a weekly closing basis, support is minor at 2908 and minor to decent at 2778. Below that, decent support is found at 2747. On a daily closing basis, support is minor to perhaps decent at 2866/2870, very minor at 2849, and decent at 2836.

It can easily be said that the NASDAQ failed to accomplish anything of consequence this week in spite of the green close. In fact, if the index receives further selling below last week's low of 2871 it can be said this past week was indicative of a major top having been formed. The index now shows a possible 4-point down-trend trendline as well as 3 successful retests of the 3134 high. The weekly closing chart now shows 2 successful retests of the 3091 weekly high close and if the index closes next Friday below 2908 it will also be 3 successful retests of the weekly closing high as well as a second sell signal.

There was one more negative sign seen this past week when the NASDAQ closed above the 100-day MA on Thursday, currently at 2950, and then closed below the line on Friday giving a failure signal that could be confirmed on Monday with another close below the line. This situation happened 3 weeks ago when the index closed above the 100-day MA 2 days in a row only to give up on the third day causing the index to fall more than 100 points (down to 2837) by the following week. On another negative note and perhaps even more indicative is that the index has been on a short-term uptrend since the beginning of May with higher highs and higher lows being seen consistently. Thursday's high at 2976 and Friday's red close gave the first successful retest of the high seen the last 2 months, suggesting the short-term rally is over.

To the downside and on the daily chart, the NASDAQ shows no support until 2875 is reached, which is where the most recent low, as well as the 50-day MA, are located. Should that level break, further support is found at 2837 and 2818. Nonetheless, a break of the 2837 low could be indicative as it would also mean that the higher high and higher low sequence signifying the short-term uptrend has been broken. It should be mentioned that the 200-day MA is currently at 2826 and climbing and if the index manages to close below that line the bearish sentiment would increase strongly.

The probabilities have increased that the NASDAQ has broken the short-term uptrend and that the mid-term downtrend that started in March may be resuming. None of this has yet to be confirmed but with so many important earnings reports coming out this week, of which many are in the index including AAPL (Tuesday after the close) and FB (Thursday after the close), it is certainly possible that confirmation will be seen by the end of the week.

With the charts starting to turn negative it is likely that the earnings reports have to be overly positive to stop the trend that may have begun this past week.

SPX Friday closing price - 1362

The SPX, like the DOW, made a new 10-week intra-week high with a rally up to 1380 and above the previous high at 1374. Nonetheless, in spite of the new 10-week high, the index was unable to generate follow through buying and more importantly generate a weekly close above last year's closing high at 1363. Having closed 4 weeks ago at 1362 and again at the same price on Friday, the index is showing an inability to break resistance and make any kind of a positive statement about the future. The SPX remains as the "only" index that has not been able to close above last year's high weekly close on this recent 10-week rally.

The SPX was supported this past week with many important financial companies reporting earnings that were better than expected. Because the week was heavily loaded with financial companies reporting, the index was the center of attention and was expected to give clues as to health or lack thereof of the financial community. Unfortunately, when all was said and done, no clues were given as the index did not rise of fall leaving traders in the same boat they were in before the earnings reports started, awaiting other reports before some decisions are made.

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 1363, minor to decent again at 1374 and decent at 1376. On a weekly closing basis, support is very minor at 1354, minor at 1335 and decent 1278/1279. On a daily closing basis, support is minor to decent at 1343 and again at 1334, minor at 1323 and again between 1305 and 1308.

It can be said that the SPX, like the DOW at 12943, has built a possible double top on the daily closing chart with the closes at 1374 and at 1376. The 2 point difference will be negligible if the index breaks below the most recent low at 1325. Nonetheless, at this point with higher intra-week highs still being seen, it can be said the index is still in an uptrend that does suggest further upside will be seen.

The index closed on the lows of the day on Friday at 1362 and will face the possibility of the decent intra-week support level at 1357 being broken on Monday. If that happens, there is no intra-week support until 1340 is reached and even then that support is considered minor. The 50-day MA is currently at 1335 and an important daily close support is at 1334, which means that if the index gets below 1357 early in the week the bulls might find themselves in a defensive position trying to prevent chart selling of consequence from occurring. The 200-day MA is currently at 1315 and if the index closes below 1334 a sell signal would be given that would likely push the index down to that line and at risk of giving a stronger sell signal if that line is broken on a daily closing basis.

To the upside, the SPX will now likely find decent selling at 1374 inasmuch as the spike down on Friday and red close on the lows of the day does suggest that a failure to follow through signal will be generated this week, making the previous high decent resistance. By the same token, a rally back up to that level is highly likely as it would be considered a needed retest of the 1384 high seen this past week, much like the NASDAQ saw this past week with the rally up to 2976, testing the previous high at 2987. A rally above 1384 would counteract the negatives seen on Friday and put the index back into the short-term uptrend that has a 1392/1394 objective.

The SPX has now returned to being a spectator and not the index that traders will watch for clues. It will also likely resume the role of anchor keeping the indexes in check as long as the debt problems in Europe continue.

The market is facing a critical week with the bulk of important earnings reports coming out during the week as well as the always important GDP-Adv on Friday. The bulls have not yet gotten the kind of reports they need to keep the market heading higher and the mood has begun to change to one of "show me" rather than one of positive expectations. This coming week will definitely have enough information to bolster one direction or the other but it is evident the traders have begun to lean more to the downside based on the action seen the last 2 weeks.

It is important to remember that in recent weeks the market has received some very negative economic reports that do suggest that the U.S., as well as the rest of the world, might be heading back into a recession. The reports have generally been ignored based on the assumption that earnings would continue to beat expectations and that as long as that continues a recession would be averted. Earnings have been beating expectations so far but not by the kind of margin seen in the past and if that continues this week there will be more disappointment than hope. Apple and Facebook will be the key earnings this week but CAT will also paint a clearer picture of how the rest of the world is doing, with China mostly in the crosshairs. By the end of the week expectations will either be raised or lowered and the market will likely reflect that in an indicative way. Expect volatility during the week but with a slight bearish bias.