DOW Friday closing price - 13096

The DOW continued the recent uptrend with another green weekly close (4th in a row), keeping the recent uptrend intact. Nonetheless, based on the previous week's strong positive reversal, it was not anywhere near as strong as the bulls expected or wanted it to be. In addition, if it wasn't for the positive Jobs report on Friday the index would have generated a red weekly close and a successful retest of the double top on the weekly closing chart at 13232/13228. With no scheduled economic reports of consequence scheduled and no earnings reports that could be considered a catalyst, it will be difficult to the bulls to maintain the rally this coming week.

In addition, the DOW found resistance of consequence when it reached the intra-week 4-year old highs made in April/May 2008 at 13132/13136 with a rally on Monday up to 13128 and on Friday up to 13133, suggesting that selling of consequence is found there and likely will not be broken without some positive fundamental piece of news. This was especially indicative on Friday as the better-than-expected Jobs report gave the bulls a reason and momentum to carry the index through resistance levels. Nonetheless, the index got up to the old highs at midday and for the last 4 hours of trading the bulls were unable to generate enough buying to carry the index higher in spite of the fact that the selling was not strong enough to generate any kind of an intra-day dip bigger than 58 points.

On a weekly closing basis, resistance is strong at 13228/13232. Above that level, minor resistance is found at 13265, decent resistance is found at 13907, and major resistance is found at 14093. On a daily closing basis, resistance is minor at 13115 and strong between 13241 and 13279. On a weekly closing basis, support is minor at 12922, and minor to decent at 12849. Below that level, support is minor at 12772, minor again at 12640 and decent at to perhaps strong at 12611. On a daily closing basis, support is minor at 13046 and at 12927, minor to decent at 12878 and again at 12715. Decent to strong support is found between 12575 and 12617.

The old highs in the DOW at 13132/13136 had been broken in March when the uptrend was in full bloom with a rally up to 13289 and a subsequent rally to 13338 suggesting that the old highs were no longer important. Nonetheless, the fact the bulls were unable to break those old highs on Friday suggests that the rally was mostly manufactured by the day-traders and will not find follow through this coming week.

The DOW made a new 3 month daily and weekly closing high on Friday and closed near the highs of the day suggesting that further upside will be seen this coming week. Intra-week resistance is found at 13136 and then absolutely no resistance is found until 13289 so if the bulls are able to break above Friday's highs by at least 5-10 points it will likely mean the index will be up another 180 points by the end of the day. A rally up to that level would be indicative of strong interest in taking the index even higher and with the previous high at 13338 not holding any special resistance strength (no previous highs before at that price) it would also likely mean a rally to the next resistance level at 13780 would occur. A rally up to that level would make the all-time high at 14198 a magnet suggesting that the minor resistance at 13780 would not stop the index for long.

To the downside, the DOW will now once again have minor to decent support at the 13000 demilitarized zone (12970-13030). Further but minor support will be found at 12845, where a previous low of some minor consequence is found, as well as the 100-day MA. Thursday's low at 12778 will also be considered minor support but the entire area from 12778 down to 12695 has to be considered decent support.

The DOW has a lot of technical reasons to rally this coming week starting with the fact that it closed near the highs of the week, generated a new 3-month daily and weekly closing high, and did it in a spike up fashion. It can also be said that the index broke a bullish flag formation that has an upside objective of 13387, which if realized would be a new 55-month high. From a technical perspective everything is looking positive. Nonetheless, the fundamental picture does not support the index at this time heading higher with the intention of making new all-time highs due to the slow economy and the pending U.S. Elections. In addition, the action seen over the last 4 hours of trading on Friday also suggests the bulls do not have the ability to garner the kind of new buying needed to take the index higher unless some surprise bullish announcement is made over the weekend.

It is likely that the technical need for higher highs than last week will be fulfilled this coming week but that can be accomplished with simply going above last week's high by a couple of points. With 13133 being the high in the DOW this past week and 13136 being resistance, it is possible that kind of scenario might be seen. It should be mentioned that the chart guidelines for this kind of scenario call for the rally to occur immediately on Monday and if that does not happen, especially if a red close is seen on Monday, it will be seen as a failure to follow through and strong selling would likely then appear.

It should be mentioned that in 2008 when the 13136 high was made, that high was made on a Monday and by Friday the DOW was down more than 700 points and within 8 weeks the index was down over 2300 points. That was a slightly different scenario as the market was getting hit every day with negative financial news of consequence. Nonetheless, it can be said that financial news from Europe could be just as bad this time around if something is not done soon and the U.S. election should also add some worry. As such, it cannot be said with confidence that the same scenario could not occur this time around.

Monday will likely be a pivotal day, especially on a daily closing basis. Charts favor further upside being seen but the trading action seen late in the day on Friday, as well as the fundamental picture suggests the bulls will have problems taking the index higher.

NASDAQ Friday closing price - 2967

The NASDAQ continued to underperform the other indexes when it was unable to get above the July intra-week high at 2987 and the other indexes did get above their own individual July highs. The lack of leadership shown by the index suggests that this rally does not have the kind of general market support that has been prevalent during the last 4 years and therefore likely to fail. Nonetheless, the index did make a new 3-month weekly closing high keeping the door open for further upside to occur if new buying is seen on Monday.

From a technical perspective alone, the NASDAQ shows a bullish chart formation that suggests follow-through to the upside will be seen this coming week and that the important 3000 level will be reached. It has been anticipated for weeks that the index would get up to the 3000 level but on every one of the previous 3 occasions during the last 4 weeks that the bulls had tried to get up to that price the index failed and in the process had generated lower highs than the previous high. On this occasion, 2 of the previous highs (at 2970 and 2976) were broken leaving only the 2987 level to break. The close near the highs of the week suggests that level will break on Monday.

On a weekly closing basis, resistance is minor at 3000, minor to decent at 3069, and decent to strong at 3091. On a daily closing basis, resistance is decent at 2976, minor at 2988, decent again 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 decent at 2910, minor to perhaps decent at 2866/2870, very minor at 2849, and decent at 2836.

The NASDAQ gapped up on Friday from 2934 to 2945 and it is a viable gap because the 100-day MA is also currently at 2945 making the gap a possible breakout of that line as well. The gap will be considered a runaway gap if it breaks the 2987 high, especially since the recent 4-week downtrend will be broken as well with a break of that high. By the same token, it should be mentioned that since May 14th the index has broken above the 100-day MA on 4 occasions (including this one) and on every one of the previous ones the index was back below the line 1 or 2 days later. It is therefore evident that on a daily closing basis the MA line at 2945 as well as the intra-week high at 2987 will both be pivotal and indicative this week.

The traders will have a tough time deciding what to do with this formation, especially if further upside is seen above 2987. The NASDAQ does have a breakaway gap to the downside between 3001 and 3016 that was generated on May 4th and it had been anticipated the bottom of the gap at 3001 would be tested at some point even within the context of a bear market. Nonetheless, getting up to that level this time under the present chart formation would mean the short-term downtrend will be broken and a breakaway/runaway gap formation to the upside built, giving the bulls added chart reasons to close the gap and renew the longer term uptrend. For that reason alone the 2987 level is not only considered resistance but a possible important pivot point.

To the downside it is relatively simple because if the NASDAQ fails once more to stay above the 100-day MA, closes the gap at 2935, and keeps the 2987 level as strong resistance, the traders will turn strongly bearish especially since no fundamental catalyst is on the horizon to turn the index around if it starts heading lower. In addition, a small failure to follow through signal will be given as well because the 2 previous intra-week highs at 2970 and 2976 failed to generate further buying.

Because of all of the reasons outlined above and the fact that the 3000 level should be a strong magnet, especially after Friday's rally and bull accomplishments, the NASDAQ could end up being the most important index to watch this coming week.

SPX Friday closing price - 1391

The SPX mimicked the DOW once again this past week generating the 4th green weekly close in a row as well as keeping the recent uptrend of higher highs and higher lows since the beginning of June intact. The index was also successful in making a new 3-month intra-week and weekly closing highs and closing near the highs of the week suggesting further upside will be seen this coming week.

The SPX did close above last week's close but just by 6 points (1385 versus 1391) and at a minor but indicative daily close resistance area at 1391 suggesting that further upside is far from assured in spite of the continuing short-term uptrend. In addition, the expected announcement details on the support the ECB will give to the beleaguered European banking industry were not given at the Draghi press conference on Thursday leaving doubts that the ECB will do all that is needed to help the European debt problems.

On a weekly closing basis, resistance is decent to strong at 1403 and strong at 1408. On a daily closing basis, resistance is minor but indicative at 1391/1392, decent at 1405 and strong at 1419. 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 but indicative at 1363/1366, minor to decent at 1358, minor to decent again at 1343 and at 1334.

The SPX closed on the highs of the day/week on Friday and though further upside is likely to be seen the index did close at a daily close resistance at 1391/1392 that is considered short-term indicative and pivotal. The index did close at 1392 on March 22nd just before it went up to the 1422 weekly closing high and at 1391 on May 17th just before an important retest of the highs at 1405 was seen followed with a drop down to 1278. Though the 1391/1392 level is not considered a strong resistance or support, it is considered pivotal as far as what the index is likely to do over the next couple of weeks.

To the downside, the 1354 low seen on Thursday in the SPX is now important support because if broken the higher high/higher low trend will be broken as well as a sell and failure to follow through signal given. The same identical thing would happen if the index closes below 1365 any day this week.

It is evident that with all the chart requirements mentioned above in play this week that the bulls are committed to doing what needs to be done to keep the technical chart buying coming in. The traders must depend mostly on momentum as the news released this past week was not of sufficient strength to keep the SPX moving higher on fundamentals. As such, it has to be considered a pivotal week.

This past week seems to have pivoted on the Jobs report alone, ignoring the ISM Index report as well as Draghi's disappointing press conference in which he was unable to deliver details on the statements made the week before. In addition, disappointment was also felt when the Fed did not deliver the additional stimulus that some analysts were expecting them to do. With no scheduled economic reports of consequence due out this coming week and the unlikelihood of Europe coming up with anything new, the traders must depend totally on chart momentum and the continuing feeling that the Jobs report shows that things are not getting worse and that solutions will be found.

One possible positive reason for the market ignoring generally negative news is the continuing low Bond rates that languish down around the 1.5-2% level and in which only security of principal but no profit is found. Many stocks are offering dividends that have higher yields than what the U.S. Bonds give and if the economy is due to languish at these levels but "not get worse" investors will buy those stocks that offer security of principal as well as decent dividends. As such, it can be said that if the outlook is for more of the same (but not worse) purchases of high quality stocks will continue. This is probably the reason why the DOW and the SPX are outperforming the NASDAQ.

This coming week is important inasmuch as there are a lot of cross currents being seen starting with the fact the ISM Index has shown 2 months in a row under 50 and if that number continues to go lower the economy will be in contraction and possible recession, yet on the other side of the coin the Jobs report showed some improvement suggesting things are not as negative as thought. Europe will remain a gunpowder keg that could explode at any minute without warning and the U.S. elections will start taking center stage and bring a lot of uncertainty as well. Chart-wise, much will be decided this week because if the indexes move higher past resistance levels of consequence, technical and computer buying will be seen.