DOW Friday closing price - 13212

The DOW generated a green close on Friday making the previous week's close at 13080 into a successful retest of the breakout weekly close high at 13058. By the same token, the index was unable to re-ignite the recent uptrend when it failed to close above the 52-month weekly high close generated 3 weeks ago at 13232, leaving the traders in a form of "limbo" waiting for the important economic figures that come out this week (ISM Index & Jobs report) before a decision is made on what the index will do from here.

The DOW ended up having another inside week, the second in a row, suggesting that the traders are waiting for further fundamental information before committing to a direction. It should be noted, though, that the last time the index had 2 inside weeks in a row while on an uptrend (October) the end result was a swift move down of 900 points from the high of the second week. The drop lasted 2 weeks before the index recuperated and re-established the uptrend. It should also be mentioned, though, that the fundamental picture is different now as the 900 point drop occurred while the European debt crisis was having its yo-yo sessions, which is not what is happening now. Nonetheless, it is evident that the traders need additional positive news to generate further upside as they have been unable to get a new high without it.

On a weekly closing basis, resistance is minor at 13232, again at 13695, minor to decent at 13907 and major at 14093. On a daily closing basis, resistance is minor to decent at 13252 and minor at 13241. Above that level, there is no resistance shown in the past 12 months. On a weekly closing basis, support is minor at 13080 and again minor at 12980 and at 12922. Decent support is found at 12801. On a daily closing basis, support is minor at 13126 and minor to decent at 13046. Below that level, there is minor support at 13005 and decent at 12759.

The DOW did close near the highs of the week and further upside is the most likely scenario for this coming week, if the ISM Index report which comes out at 10:00am on Monday is not way out of line. By the same token, one of the negative catalysts for the index this past week was the Chinese manufacturing report which came in under 50 this past week, meaning that the Chinese economy is shrinking and likely heading for a recession. The ISM Index is expected to come out at 53 (above last month's 52.4) but if by any chance it also comes out under 50 it would be a strong negative that would likely generate a strong sell-off right away. A higher number than 53 would likely push the index up to new 52-month highs.

To the downside, the 13000 demilitarized zone in the DOW is an important short-term support that is not likely to be broken unless some fundamental negative comes out. Nonetheless, if broken the index would likely fall down to the previous high made last year at 12810 (12734 intra-week). A break below 12700 would likely be damaging to the chart and probably cause the index to fall to the 12000 area. On a very short-term basis, Thursday's low at 13032 is a support that needs to hold in order for the index to move higher. A break of that support, which would also be a break of the 200 60-minute MA, could be the catalyst for the stock to start heading lower.

To the upside, the DOW only has minor resistance at the high seen 3 weeks ago at 13289 (13232 on a daily closing basis). A break of that resistance will likely generate a rally up to the 13700 area where some previous resistance from 4 years ago is found. It should be mentioned that the strong momentum that had been in effect since December has ebbed and the index has traded sideways during the past 2 weeks. News is now needed to regenerate further movement.

The chart suggests the DOW will be moving higher inasmuch as the overbought condition has been alleviated and the index has successfully retested the high seen the past 52 months at 13058. Nonetheless, this is a week with 2 major reports due out and that will have an effect on what the traders end up doing.

NASDAQ Friday closing price - 3091

The NASDAQ continues inexorably upward generating the 7th week in a row of green closes as well as the 12th of the last 13. Nonetheless, the index did not outperform the other indexes and that fact likely brings a small note of caution into the minds of the traders. The index did close near the lows of the week, contrary to the other indexes which closed near the highs, which suggests that the index might be slowing down and possibly nearing the top of its rally.

The NASDAQ started out the week strongly with a gap on Monday, a new 12-year high, and a close at the highs of the day. Nonetheless, the index barely followed through to the upside on Tuesday and ended up having a reversal day which was followed up with 3 additional red closes as well as closure of the gap, suggesting the buyers are reluctant to buy without additional supportive fundamental news. With the index having been the leader of the market for much of the last 4 years and no resistance above found until 3204, the failure action seen this week has to be worrisome to the bulls.

On a weekly closing basis, the only resistance found near-by is the low weekly close from the year 2000 at 3204. On a daily closing basis, minor resistance is found at 3122. Above that level, there is no resistance found above over the past 12 months. On a weekly closing basis, support is minor to decent at the previous weekly closing high at 2873. On a daily closing basis, support is minor at 3063 and minor at the recent breakout high at 2988 and decent at 2910.

The NASDAQ gave mixed signals this past week generating a new 12-year weekly closing high but showing weakness on the daily chart the last 4 days of the week. The index did bounce up on Friday after the gap at 3070 was closed with a drop to 3069 on Thursday. The bounce on Friday does make the 3069 low become a support level with some meaning this coming week. A break of the support at 3069 would generate a drop down to the next minor support level at 3044 and if that level breaks, a drop down to the important psychological support at 3000 would likely occur.

It does need to be mentioned that the 3000 level in the NASDAQ has not been tested yet and chart-wise that is a high probability. By the same token, a drop down to 3000 would mean the index has corrected 4% from the 3134 high, as well as given a small sell signal with a close below 3063, making it very difficult for the bulls to generate enough new buying to resume the uptrend. As such, the minor support levels mentioned are important as they could end up being a domino-like catalyst that would be difficult to negate.

To the upside, the formula is simple inasmuch as the bulls need to make a new 11-year high above 3134 before a break below 3044 occurs. The 3069 level will be a pivot-point this week, as well as a minor support. Nonetheless, with the NASDAQ having closed near the lows of the week, the probabilities of 3069 being broken are high, so it all will mostly depend on whether 3044 breaks or not. That is the crux of the matter for this coming week.

The parameters are clearly set (3134 to the upside and 3044 to the downside) and it will all likely be determined as early as Monday after the ISM Index report comes out.

SPX Friday closing price - 1408

It can be said that the SPX was the leader of the indexes this week as it was the only one that generated a new multiyear weekly closing high "and" closed in the upper half of the week's range, suggesting follow through to the upside will be seen this coming week. The financial sector continued to see strong buying this week as prices, compared to what the rest of the market has done, continue to be depressed. In addition, bond yields in European countries fell this week in spite of continued fears that a new debt crisis could occur in Spain, Italy, and Portugal. Such action implies that those fears are diminishing rather than growing.

The SPX continues to trade below the highs seen in May08, unlike the other indexes that have surpassed theirs, and though the action seen is short-term bullish it is more of a catch-up type action than anything else. As such, no special meaning is being given to it, other than as a short-term adjustment to an inequality in the market.

On a weekly closing basis, resistance is minor at 1413 and minor to decent at 1425. Above that level, there is minor resistance at 1455, minor to decent at 1504 and strong resistance between 1552 and 1561. On a daily closing basis, there is minor resistance at 1409 and minor to decent at 1416. Above that level, there is no resistance found in the last 12 months. On a weekly closing basis, support is minor at 1397, very minor at 1388 and at 1375, decent at 1363, minor again at 1325 and decent to perhaps strong at 1268. On a daily closing basis, support is minor 1403 and minor to perhaps decent at 1392. Below that level, minor to decent support is found at 1363 and decent to perhaps strong at 1343.

The SPX is likely to continue to outperform the other indexes this week unless there is some negative news on the debt crisis in Europe. The ISM Index report and the Jobs report will affect the index if out of line but then again the SPX would still likely do better than the other indexes this coming week for the reasons mentioned above.

If there are no surprises in the economic reports due out the SPX is likely to be moving up to the 1440 level this coming week as that is a level that has a magnet attached to it. By the same token, the financial industry still has many negatives attached to it and therefore the 1440 level is not likely to get broken unless the economic reports are bullish.

To the downside, the SPX still has a good chance of retesting last year's high weekly close and breakout area at 1363. By the same token, much like with the NASDAQ, a drop down that low would give a short-term sell signal, putting the bulls in a difficult position of having to rally the index over 80 points to renew the uptrend. As such, the bulls cannot afford any daily close below 1392 as the repercussions of that would require very strong fundamental positives to turn the trend back up, and those seem unlikely to be found in the next few months.

The bulls are committed to taking the SPX higher this week. If the economic reports don't throw a monkey wrench into the mix, the index is likely to go higher with 1440 as the upside objective.

The indexes are facing a pivotal week with 2 major economic reports due out. The ISM Index is due out on Monday and the Jobs report is due out on Friday. The momentum shown over the past few months has stalled and the traders can no longer depend on momentum to carry the indexes higher. Dips are no longer being bought as aggressively as before and the market is now in a "show me" mode. By the same token, the bears remain on the defensive as nothing tangible has yet come out to suggest things won't continue down the same path as before. Traders are wary but still leaning on the buy side.

Nonetheless, the optimism has ebbed and the market is now susceptible to bad news, unlike the last couple of months where bad news was ignored. In addition, China is now showing signs of a recession and the European markets have also begun started to weaken and if that continues it is going to be very difficult for the U.S. market to overcome world pressures. On a positive note, though, further bad news is required to trigger selling in the U.S. and that that is not a given.

The next earnings quarter begins in 2 weeks and up until recently that has driven the market higher as "generally" the market rallies during the first 3 weeks of an earnings quarter. Nonetheless, many economists are warning that earnings will start showing weakness this quarter as the market has moved to far and too fast to keep up with the actual fundamentals. These warnings are starting to find ears and the traders are becoming jittery, especially since the market has begun to stall as a chart level where no stall was expected. Simply stated, the bulls need additional positive news to bring new buyers into the market. Enough news, though, is scheduled during the next 2 weeks to answer many questions and give the market direction.