DOW Friday closing price - 12801

The DOW generated a minor reversal week having made a new 44-month high but closing in the red suggesting that the seasonal correction might be starting. The reversal week was not caused by technical factors but by potentially bad news from Europe and therefore will need confirmation of both the news and the technical reversal to be seen this coming week before the traders turn around to sell aggressively. The index did end up closing below the previous weekly closing high at 12810, suggesting that a failure signal might be "in play". Nonetheless, the close was only 9 points below the 12810 level and that is not sufficient to make the traders convinced that the rally top has been found. Another red close is needed to be seen next Friday to stimulate further selling of consequence.

The DOW ended up having a minute trading range for the week of only 179 points and the volume for the week was the 6th lowest for the last 3 years, suggesting that not only were the traders not involved but not interested. The volume for Friday, after the news from Europe came out, did not pick up at all also suggesting that the news itself was not convincingly bad and that the traders will await further news before making any kind of a decision.

On a weekly closing basis, resistance is minor at 12810 and at 12862 and minor to decent at 13058. Above that level, there is minor resistance at 13695, minor to decent at 13907 and major at 14093. On a daily closing basis, resistance is minor at 12810 and at 12890. Above that level there is no recent nearby resistance as the index would be making a new 12-month high. On a weekly closing basis, support is minor at 12217 and minor again at 11934. On a daily closing basis, support is decent at 12632, minor at 12584 and again at 12480. Below that, there is minor to perhaps decent support between 12355 and 12359.

From a purely technical perspective, the DOW did show a few failure signals starting with the fact that the index got up as high as 12924 on Thursday and twice during the week above 12900 and yet failed to get up to the 13000 demilitarized zone in spite of there being no resistance and no selling of consequence being seen. This type of action typifies a tired and spent market where prior momentum is the only thing driving the index upward. Such a scenario usually ends up with a strong action in the opposite direction unless new and positive news continues to come out every day.

The DOW shows no support on the daily chart until 12580 is reached and the support there, as well as the next support below at 12529 are considered minor in nature and not likely to stop the index from heading lower, except for perhaps a small short-term bounce. The index did end up closing in the bottom half of the day's trading range on Friday and unless the negative news is resolved over the weekend (very doubtful) the probabilities do suggest further downside on Monday.

The 60-minute chart of the DOW shows a bearish inverted flag formation that if broken (a drop below Friday's low at 12743) would offer an objective of 12614. This objective fits in well with the 200 60-minute MA which is currently at 12610. The 200 60-minute MA has not been tested since it was broken the third week of December and if it is seen this coming week, it would be evident that the upside momentum that has been driving the market for the last 8 weeks would dissipate. The key level on Monday is 12750 which is where the 100 60-minute MA is currently located. That 100 60-minute MA is a line that has been seen 3 previous times since December 20th but has held each and every time. That line was seen on Friday for the 4th time and was able to hold and generate the late rally. A break of that line would be significant, at least from a short-term point of view.

To the upside all resistances are minor starting with 12810, then 12841, then 12876 and the recent high at 12924. The 12841 level is likely to be the most important on Monday inasmuch as it is a clearly defined resistance on the 60-minute chart and traders are closely watching the sensitive chart points to decide what to do while news from Europe develops. The Greek vote in parliament required by the IMF in which the austerity measures are not only to be adopted but committed to cannot happen before Wednesday (if then) and therefore the traders are likely to trade the DOW technically in the meantime. Because of that reason it is likely that intra-day resistances will carry more importance than they usually do.

The DOW did close on Friday in the lower half of the day's trading range and further downside is the most likely. The trading range on Friday was 146 points and using that same scenario the trading range for Monday has a high probability of being something like 12841 to 12595.

NASDAQ Friday closing price - 2903

The NASDAQ continued to make new 11-year highs this past week going above last week's high at 2908 with a rally up to 2930. Nonetheless, the index did end up having a minor reversal week inasmuch as it generated a red close on Friday possibly suggesting that a temporary top has been found. Unfortunately for the bears, the reversal was not strong as the red close was only by 2 points and the previous intra-week high at 2874 was not seen or tested, suggesting that the reversal was more of a fluke than it was indicative.

The NASDAQ has led the indexes during the past few weeks, much like it did from 2008 to 2010 and that remains a bullish sign that the market may be heading higher. Nonetheless, like with the DOW the index has no resistance above and the 3000 level beckons like a magnet and yet having traded every day above 2900 the index was only able to get up to 2930, suggesting a tired market that requires continuing good news to go higher.

On a weekly closing basis, there is no resistance found over the past 10 years other than the psychological resistance at 3000. From the year 2000, there is weekly close resistance at 3204. On a daily closing basis, there is only very minor resistance at 2927 and then no resistance above. On a weekly closing basis, support is minor to decent between 2605 and 2616. On a daily closing basis, support is minor 2873, minor again at 2805 and once again minor at 2763 and at 2737.

The NASDAQ did not generate any kind of technical negatives this week even on Friday when the other indexes did show some weakness. As such, there is no reason at this time to think the index has topped out. On the other side of the coin, the index remains extremely overbought and with no support other than the previous daily and weekly high close at 2873, which as a high close is considered minor. The negative to this, of course, is that any clear sign of a top being formed is likely to cause a strong reaction downward as the closest support of any consequence is down at 2738, which is 165 points lower from Friday's close. No negative signs of that, other than the minor reversal weekly close seen on Friday, have occurred.

The NASDAQ continues its impressive string of green closes running the string to 26 out of the last 37 days and no one day or minor correction being more than 50 points, suggesting that the momentum continues strong. The traders are likely to continue to buy this impressive uptrend unless some negative fundamental news occurs or the index starts to fail on the chart. On that note, the index now has 4 gaps over the past 6 weeks that have not been closed and therefore closure of the most recent gap between 2868 and 2885 will likely be seen as a sign that the index has found a top. It is likely the traders will be putting their attention on that factor alone as a closure of the most recent gap will likely make the next gap up between 2712 and 2721 a target. That level certainly fits in well with the only intra-week supports of any consequence which are found at 2705 and 2743. It should also be mentioned that the 50-day MA is currently at 2710 making that whole area a target for the bears should they be able to get the index heading lower.

To the upside it is simple, if the minor reversal seen on Friday is negated with a rally above the week's high at 2930, the probabilities of the NASDAQ getting up to the psychological resistance at 3000 will be high. The big question to be answered this coming week is whether the reversal, though very minor in nature, is in fact a reversal or simply a minor hiccup in the uptrend due to the uncertainty surrounding the Greek problem. Based on the chart, the 2885 level is now support and if broken and the gap at 2868 is filled, the probabilities of the index heading substantially lower will increase strongly.

SPX Friday closing price - 1342

It can be said the SPX was able to generate a successful weekly close retest of the decent resistance at 1345 with the red close on Friday at 1342. The reality is, though, that the close on Friday was only a couple of points below last week's close at that price and not convincing enough to say with certainty that the retest of resistance was genuinely successful. Nonetheless, from a technical nature, the index did have a reversal week with the red close after making a new 7-month high and if follow through is seen next Friday then it will be highly indicative that a top to this rally has been found.

The SPX continues to be the index that the traders are watching due to its focus on financial issues, which is what is acting as a brake to the overall market due to the financial issues in Greece and other European countries. The bulls were able to get the index to break the decent intra-week resistance at 1345 but not a weekly closing basis and that is a negative that the bears can build on this week if no positive surprises come out of Greece.

On a weekly closing basis, resistance is decent at 1345 and strong at 1363. On a daily closing basis, resistance is minor at 1345 and decent at 1353. Strong resistance is found at 1363. On a weekly closing basis, support is decent at 1268, minor at 1257, and decent again between 1216 and 1219. On a daily closing basis, support is minor to decent at 1305/1306, very minor at 1289 and the nothing until decent support is found between 1249 and 1256.

The SPX has shown for the past 12 months that 1345 is a level of resistance of consequence. The index has closed above that level, on a daily closing basis, a total of 4 times since April of last year but every single time the index closed above that level the very next day the index closed below it, suggesting that until that changes the uptrend has not resumed.

Much like with the other indexes, there is no support close by in the SPX making the risk/reward ratio unattractive to the buyers, especially if the news starts to turn negative. The index does show some very minor daily close support at 1312 and stronger support at 1305. Nonetheless, that is still 3% below the closing price on Friday and very appetizing for the bears if there is no positive news coming out. Below 1305, the next level of established support of consequence is down around 1256.

Like stated above, 2 daily closes above 1345 are needed in the SPX to stimulate additional buying. By the same token, the index does have daily close resistance of consequence at 1370 and until that is broken it cannot be said the bulls have accomplished anything of consequence. Based on the history of the last 12 months, the probabilities are high that the next move will be down to the 1296-1300 level (intra-week).

The market continues to wait for news from the Greek situation before making any decisions of consequence. Nonetheless, there is a growing concern that even if the loan to Greece goes through that the austerity measures imposed on the citizens of Greece are so severe that the end result will still be a default. As such, the positive aspect for the market on the loan going through continues to deteriorate and may not have the positive impact that was expected previously. In addition, there is now a strong belief that the market is overextended in price as well as technically and a lack of buying seems to be evident by the low volume and insignificant gains to the upside over the past couple of weeks. Simply stated, the market "requires" a constant flow of good news to "inch" higher and with the bulk of the important earnings reports already out the probability of continuing to receive good news has diminished.

This coming week, though, there are several economic reports of some consequence, such as Retail Sales on Tuesday that could generate some impact. By the same token, it is difficult to imagine these reports being substantially better than anticipated as they have all been positive as of late, making the probabilities low that better and better results will continue to be seen every month. Perfect example of this is the Retail Sales which is expected to come out at 1.2% whereas last month's number was .1%. The same can be said of Empire Manufacturing and Philadelphia Fed reports which are expected at 15.0 and at 10.0 after last month's 13.5 and 7.0 results respectively.

Though the reversal signals given on Friday in the indexes were all very minor in nature, they are reversal signals and in a market that has moved up so strong for the past 3 months without missing a beat it would be unusual to see a 1-week turnaround of consequence without negative news of consequence attached. As such, it might be just the "tip of the iceberg" that was seen this past week. It does need to be mentioned once again that there is a seasonal correction that generally starts around the beginning of February which in conjunction with the overbought condition and general feelings of negativity surrounding Greece's ability to institute the austerity measure suggest that there are "good" reasons to think that a top to this rally has been found.