DOW Friday closing price - 12982

The DOW continued inching upward toward the April 2008 high weekly close at 13058. Though that resistance level is not considered major, it is indicative inasmuch as that was the first pop the index generated after the recession pressures became evident in 2008. It is also an area that showed support while the index traded above that area in 2007. A weekly close above 13058 will state that the traders believe "all" the recessionary pressures have evaporated and that the economy is on the way to a full recovery. It is unlikely that is the case, but a close above that level would be sign that is what the traders believe.

The DOW has been having problems going higher as the index did close 4 weeks ago above the previous important weekly high close at 12810 and yet it has only been able to move above that close a total of 170 points during the last month, suggesting that further upside will require a consistent dose of new and good news. This coming week the bulls will have a slew of reports that could help, but could also hinder as the index is severely overbought and likely overdone to the upside.

On a weekly closing basis, resistance is 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, 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 12800, minor again at 12217 and at 11934. On a daily closing basis, support is very minor at 12914, minor between 12780 and 12800, minor to decent at 12632, minor at 12584 and again at 12480.

The DOW closed on the highs of the day/week on Friday and further upside is expected at the beginning of the week. The index did break out from a 9-day consolidation formation between 12743 and 12924, which was tested successfully on Thursday with a drop down to 12882, and that means that more to the upside is likely to be seen this coming week. Nonetheless, the flag formation that offered an objective of 13138 was negated with that same drop down to 12882 and that is now one less tool the bulls have to take the index higher.

The DOW is facing a week of economic reports that could make a difference, starting with Durable Goods on Tuesday and the ever important ISM Index on Thursday. Interspersed among those 2 reports there is some housing, manufacturing and consumer confidence reports that also carry some weight. With the traders waiting for news this coming week these reports could provide enough short-term information to make some difference and either push the index above the resistance levels or jump start the seasonal correction that usually begins sometime between late January and early March.

To the upside, the DOW shows 3 weekly close levels that combined make the area decent resistance, with 2 from previous low closes in 2007 at 13079 and at 12980 and one previous high close from 2008 at 13058. There is no resistance on the daily closing chart as the index is into new 12-month highs. To the downside and on the weekly chart there is no support of any consequence until the 12000 demilitarized zone is reached. Nonetheless, on the daily closing chart, there is minor but likely indicative support at 12780/12810. Below that, there is additional minor support at 12643 and then nothing until the 12000 level is reached.

The bulls find themselves in a difficult situation needing consistent good fundamental news to keep the rally going. The bulls do enjoy strong momentum and a general belief that things are getting better, as well as the fact that the bears are reluctant to sell as all dips, even minor ones, have been bought. Nonetheless, the bulls have to be worried because the slightest hiccup in the recovery will meet not only with the seasonal correction that is seen every year in the charts but the fact that there is no support of consequence below for 1000 points.

The DOW is likely to move higher on Monday with the upside objective of anywhere between 13058 to as high as 13132. Nonetheless, after Monday's trading is over, traders will likely move the market based on the economic reports and how they are interpreted. The fears of a Euro collapse have been put aside for now and likely will not be a factor this coming week. Expect follow through on Monday and then some reactive moves based on the reports that come out.

NASDAQ Friday closing price - 2963

The NASDAQ took one step further in trying to reach the 3000 level with a rally this past week to 2970. Having gotten this close it is highly likely that the traders will push the index up to that level simply to accomplish the goal. The index did close on the highs of the week and further upside is likely to be seen early in the week.

The NASDAQ has not been up to these levels since Dec2000 and that means the traders will concentrate more on the psychological resistance factor found in such a level than on any particular point of reference on the chart. By the same token, the index did have a major low in May00 at 3048 and a monthly high at 3028 in Dec2000 that the traders will be looking at and giving some importance from a chart point of view.

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, no resistance is found over the past 12 months. On a weekly closing basis, support is minor to decent between 2605 and 2616. On a daily closing basis, support is minor at 2929, at 2915 and at 2904. Below that there is minor support 2873, minor again at 2805 and once again minor at 2763. Decent support is found at 2737.

The NASDAQ has been the "driver" to the upside during the past 3 years but during the past 3 weeks that has begun to change, suggesting that the market is reaching levels where further bullishness of consequence may not occur. This past week, there was no specific selling in the index, versus the other indexes, but then again the NASDAQ did not outperform the other indexes either, making the week very uneventful.

The NASDAQ has no support of any consequence nearby. Like the DOW, the index does have a previous daily and weekly closing high at 2873 that is likely to act as minor support as well as a pivot point. Nonetheless, a close below that level would give a failure signal and likely thrust the index down to the 2740 level on the daily chart or even down to the 2680 level on the weekly chart before support of any consequence is found.

To the upside, the NASDAQ will likely see a print of 3000 and could see it go as high as 3028 to 3042, but further bullish news is required to accomplish anything further than that. With the index having closed at 2962 on Friday, it is likely to no further upside than an additional 66-80 points will be seen, which is less than 3% additional rally.

SPX Friday closing price - 1365

The SPX was able to close above the 2011 high weekly close at 1963 on Friday but the close was only by 2 points which is not sufficient enough of a difference to effectively say the level was broken. This is especially true since the index was unable to get above the intra-week high at 1370 seen in May of last year, suggesting that the traders still believe that the financial industry has not recovered above where it was 9 months ago.

The Greek default crisis was solved this past week with the agreement to loan Greece the funds necessary to avoid the default in March. The decision effectively removed one of the fundamental constraints from the SPX that had held the index down. As such, what the index does from here on in will be indicative of what the traders believe will happen over the next few months, and possible the rest of the year.

On a weekly closing basis, resistance is strong at 1363. Above that level, resistance is decent at 1395 and strong again at 1425. On a daily closing basis, resistance is strong at 1363. On a weekly closing basis, support is minor at 1342, decent at 1268, minor at 1257, and decent again between 1216 and 1219. On a daily closing basis, support is minor between 1342 and 1343, minor to decent at 1305/1306, very minor at 1289 and the nothing until decent support is found between 1249 and 1256.

The SPX continues to be at a "moment of truth" on the chart as the high for last year at 1370 represents a resistance/pivot point level on the chart that reflects what is in the minds of the traders. A break and close above 1370 would suggest the traders believe the financial problems have been solved, at least to the point of allowing the market in general to "resume" the uptrend that was seen back in 2007. A failure to get above 1370 will be signal that the traders believe the financial industry has not solved its problems and that the negative effects of the 2008 recession remain. All of this revolves around the 1370 level on the chart and will likely be addressed on a convincing basis by the end of the week, notwithstanding the fact that after a resolution is seen the seasonal correction could occur.

On the weekly closing chart, the SPX shows no support of consequence until the 1268 level is reached but on the daily chart support is found around the 1300 level. By the same token, that is 65 points lower than Friday's close and if the bulls are unable to get the index above 1370 a drop down to that level would be highly probable. The 1343/1345 level must be considered a pivot point on a daily and weekly closing basis as it has proven to be important to the traders during the last 12 months.

The Greek default problem was resolved this past week but it did not help the market as much as the bulls hoped it would. A lack of both buying and selling was evident this past week as the volume seen was low. In fact, if you take out Tuesday's volume right after the news that the Greek loan was approved, the volume would have been the lowest in years. In fact, the volume on Friday's trading was even lower than the volume seen right after Xmas day, suggesting that no one is interested in doing anything in the market right now.

Things should be different this week as there are a few important economic reports starting with Durable Goods and Consumer Confidence on Tuesday, Chicago PMI and second GDP estimate on Wednesday, and the ISM index on Thursday. With the Greek problem resolved for now attention should turn back to economic data as a guide for direction. Economic data has not generally been as positive all other news during the past couple of weeks and with a seasonal correction due to start at any moment it won't take much to get the indexes to start correcting from the extremely overbought condition that exists. By the same token, the indexes are at chart levels that if broken through continued positive news would generate "new" buying that when combined with the momentum being seen right now could give a new leg up to the indexes.

Probabilities favor a correction starting this week due to all the chart factors mentioned above. In addition, it is difficult to believe that without some type of correction that the bulls could be successful in not only breaking the resistance levels but also generating a new leg up.