DOW Friday closing price - 13207

The DOW continued the recent uptrend generating the 6th green weekly close in a row and keeping the recent uptrend intact. More importantly, the index was able to make a new 57-month weekly closing high breaking above the double top that was put in place in Apr/May of this year at 13228/13232 and suggesting that not only further upside is likely but that the all-time high at 14198 could now be targeted.

On the other side of the coin, the DOW did not accomplish breaking the year's intra-week high at 13338 and the volume for the week was extremely low signifying that the breakout on the weekly chart may not have the kind of necessary strength to generate new chart buying. In addition, this was options expiration week where buying at the end of the week is normal, meaning that the breakout on Friday may have been more about a lack of volume on a day that buying was to be seen than a true breakout.

On a weekly closing basis, resistance is minor at 13625, decent at 13907, and major at 14093. On a daily closing basis, resistance is strong at 13279. Above that level, no resistance has been seen the last 12 months. 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 very minor at 13165, minor at 13046 and at 12927, minor to decent at 12878 and again at 12715.

The DOW did break out of a bullish flag formation on Thursday that does offer a short-term (1-5 days) objective of 13768. A strong rally should be seen on Monday as flag breakouts are supposed to generate an immediate spike high the day after. If that follow through is not seen on Monday, and especially if the index trades back below the top of the flag at 13223, disappointment will be felt and the high seen on Friday at 13281 could turn out to be a top to this rally.

Fundamentally, there was no additional catalyst this past week that would support new highs so the breakout on Friday is extremely suspect. This is especially true since the previous intra-week highs were not broken and the other indexes did not end up doing the same breakout as the DOW. By the same token, the traders are facing another week of ennui as no economic reports of consequence are scheduled for this coming week and the lack of interest, participation, and volatility does favor the recent uptrend continuing.

The DOW still faces intra-week resistance at 13284, at 13297, and more importantly at the year's high at 13338. Based on the action seen the last 10 days it is difficult to imagine enough participation and interest to get above those resistance levels.

To the downside, the DOW chart shows some very minor support at 13176 and again at 13145 and then a bit stronger at 13094. Further support will be found at the 13000 demilitarized zone and decent support will be found at a previous low of minor consequence at 12845 that does includes the 50-day MA that makes the support a bit stronger.

With such little volatility as well as small trading ranges it seems that the traders are waiting for a catalyst to jump-start new interest. Nonetheless, other than a "B" type of report on Friday in the Durable Goods Orders there is little else this coming week that could be considered a catalyst. On Tuesday the minutes of the last FOMC meeting will be released but it is highly unlikely that there will be any new information that could affect the market in any direction. As such, unless something comes out of Asia or Europe this coming week, the probabilities favor more of the same and that means that the bull-flag broken on Friday will likely fizzle out, making the week another boring and uneventful event.

NASDAQ Friday closing price - 3076

The NASDAQ was definitely the leader this past week having appreciated close to 2% in value where the other indexes moved up less than 1%. In addition, the index closed on Friday above a decent weekly close resistance level at 3069 leaving the door open for the 13-year high weekly close at 3091 to be tested this coming week. The leadership shown by the NASDAQ this past week is the best indicator the bulls could hope for as it was this index that led the market up during most of the last 4 years and if that continues it would likely mean this rally is going to carry on.

On a weekly closing basis, resistance is decent to strong at 3091. Above that level there is no resistance shown on the weekly chart for the last 10 years. On a daily closing basis, resistance is decent to strong at 3119/3122. On a weekly closing basis, support is minor at 2908 and minor to decent at 2778. On a daily closing basis, support is minor to decent between 2976 and 2991, minor to decent again at 2961, and then decent at 2909.

The NASDAQ closed on the highs of the week on Friday and further upside is expected to be seen with the breakaway gap area between 3086 and 3097 as the week's objective. Closure of that gap would remove all short-term chart negatives and leave the 13-year high at 3134 as the only obstacle left to overcome.

Resistance in the NASDAQ is found at 3085/3086 and based on the lack of buying interest and participation seen over the past week the resistance will be difficult to overcome without some additional fundamental help. By the same token, the bulls have been in control, have been successful in generating 5 green weekly closes in a row and 10 out of the last 11, and are now committed to closure of the gap and to making a new 13-year high above 3134 as any failure here would be technically damaging.

Support in the NASDAQ is found at the 3000 level demilitarized zone and then again at 2946. Nonetheless, there is no close by dependable support and that means the bulls can ill afford to let the index even pause as a 76 point drop at this time would be indicative of problems. Some very minor support is found at 3044 but that would mean Friday's low at 3060 would get broken and any sign of weakness at this time could start the ball rolling downward.

The probabilities favor the NASDAQ getting up to 3085/3086 on Monday but that is where the question marks will once again begin. Closure of the gap will re-energize the bulls into doing more buying while a failure to close the gap could bring disappointment. At this time, the probabilities favor closure of the gap and a rally up to the previous high at 3134 where questions will again be asked that will require some fundamental answers.

SPX Friday closing price - 1418

The SPX made a new weekly closing high for the year, above the previous high weekly close at 1408. The index also closed only 7 points below the high weekly close for the past 55 months at 1425, seen back in May08. The index did close on the highs of the day/week on Friday and further upside is expected to be seen this coming week.

The SPX continues to be the laggard but being the closest of all the indexes to this year's intra-week high it will likely be the one the traders watch this coming week for signs of what the indexes will do. In addition, since the financial industry has been the one to blame for the last recession it stands to reason that if the SPX does break out it will mean that things are truly on the road to recovery.

On a weekly closing basis, resistance is decent to strong at 1425. Above that level, no resistance of consequence is found until the 1500 area is reached. On a daily closing basis, resistance is 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 shows intra-week resistance at 1422 from the high of the year seen in April but if broken the index will find additional resistance at 1440 from the high seen in May08 after the first bounce from the recessionary fall occurred. As such, a break of this year's resistance will not necessarily mean the index is heading much higher as another equally strong resistance level is found just 18 points above. By the same token, if the index is able to get above 1440 it will be seen as a strong bull accomplishment and likely generate a fast move up to the 1500 level.

Intra-week support in the SPX is not found until 1386 is reached but on a daily or weekly closing basis, the 1405 level should now be considered minor to decent support. In addition, Friday's low at 1414 is going to garner some attention inasmuch as a break below Friday's low could derail the rally mainly because of the importance of this resistance area.

I do need to mention that the high daily close for the SPX this year was made in April and it was at 1419. With the index having closed on Friday at 1418 it makes Monday's close important, especially if a red close occurs. A red close on Monday would open the possibility of this truly being a double top having been up to this level in April and now in August. True double tops are usually made with a decent time frame between and not on a short-term basis like a few days or just a couple of weeks. The traders will be very aware of this situation and it therefore can be said that Monday might be pivotal.

As I mentioned in last week's newsletter, the probabilities favor the SPX trading in a narrow trading range between 1385 and 1425 over the next few weeks without either of these areas generating a break, at least not on a closing basis.

The market seems to have stalled as further economic news is needed to help the traders decide on direction from here. No economic news of consequence is due out this coming week with the possible exception of the Durable Goods report on Friday which is "B" kind of report. Momentum keeps the indexes inching upward but not in a meaningful way. On the other side of the coin, what has already been accomplished has put the bulls in a "committed" situation to pushing the indexes higher as any fall back from here could be technically damaging as a failure signal would be given. With the high likelihood that the economy will not change much during the next few months, technical trading could take center stage until at least the election.