DOW Friday closing price - 13228

The DOW closed near the highs of the week after having had the biggest 1-week trading range since the third week of December. The big trading range and close near the highs of the week suggests that the paused uptrend will resume this coming week if there are no negative surprises from Europe over the weekend or from the important economic reports due out this coming week.

The bulls were not able to "close the deal" on Friday, though, as the DOW was unable to make a new 44-month weekly closing high even though the index was trading above the previous high weekly close just a few minutes before the close. Nonetheless, some profit taking or selling was seen at the end of the day suggesting that the traders still need further positive news to successfully generate a new run to the upside.

On a weekly closing basis, resistance is decent at 13232. Above that level, no resistance is found until minor to decent resistance at 13625. On a daily closing basis, resistance is strong between 13241 and 13264. Above that level no resistance is found during the past 12-months. On a weekly closing basis, support is decent between 12810 and 12849. On a daily closing basis, support is minor to decent at 12927, and minor to decent again at 12896. Support is decent at 12849 and decent to strong at 12715.

The bulls were successful this week in negating a bearish Head & Shoulders formation in the DOW as well as build what can now be considered a multiple high formation over the past 6 weeks with intra-week highs at 13289, 13264, 13297 and this past week's high at 13266, and from a purely technical perspective the negation of the H&S formation strongly suggests that the uptrend has resumed and that further upside will be seen.

By the same token, the DOW continues in a precarious as well as mixed situation fundamentally as earnings reports have been better than expected while economic reports have been worse than expected, leaving the traders unsure of what the near future will bring. It is now clearly evident that the "general" resistance area 300 points above a major even number (13000) has now also become a strong resistance area on the charts based on past action and that further positive news will be needed to punch through that resistance.

To the downside, the DOW also finds itself in a precarious situation as no support is found on the daily chart until the 13000 level is reached and if any of the news this coming week is negative, drops down to that level could happen swiftly. A drop down to 13000 would make it very difficult for the bears to re-generate enough new buying to make a new high, at least until the next set of earnings reports come out in July.

Once again the DOW will be dependent on news this coming week and with 90% of the important earnings reports already out the bulls will need for the economic reports to be better than expected.

Technically speaking, the probabilities are high that the DOW will make a new 44-month high this week and probably as soon as Monday. Multiple highs are generally broken and with no news due out on Monday it is likely the bulls will continue to press upward to get rid of that magnetized condition. A break above the high of the last 6 weeks at 13297 is likely to be seen. By the same token, whatever happens on Monday is not likely to be important as the first of the important economic reports (the ISM Index) is due out Tuesday and this week will be more about fundamental news than charts.

NASDAQ Friday closing price - 3069

The NASDAQ was the recipient of most of the good news this past week when AAPL and AMZN reported much better than expected earnings. Those 2 stocks alone rallied over $90 between them (more than 10% each) and helped the index rally close to 100 points after the reports came out. The rally invalidated several negative chart items including the break of the 50-day MA as well as the runaway gap of a breakaway/runaway gap formation between 3059 and 3061. In addition, the index generated a classic weekly reversal (lower lows, higher highs, and a close above the previous week's high) as well as built was can be considered a bullish island formation on the daily chart with a gap drop between 2999 and 2973 on Monday and a gap up between 2979 and 3010 on Tuesday. Island gaps are rare but when confirmed are powerful indicators of a major low having been formed.

The NASDAQ closed on the highs of the week and further upside on Monday is expected with closure of the breakaway gap between 3097 and 3086 as the main objective. A battle is expected to be fought between the bulls and the bears around the 3091 level as the 14-year high weekly close, seen 5 weeks ago, is at that price. For the bulls to come out winners a further positive catalyst is needed.

On a weekly closing basis, decent resistance is found at 3091. Above that level, decent resistance is found at 3204. On a daily closing basis, minor resistance is found at 3074 and decent to strong resistance is found at the double top at 3119/3122. On a weekly closing basis, support is minor to decent at 300 and again at the previous weekly closing high at 2873. On a daily closing basis, support is minor to decent at 2988/2991 and decent at 2961.

The NASDAQ generated one important chart item this past week having closed in the green making the previous week's close at 3000 into a strong support level, especially since 3000 also has to be considered a strong psychological support. Such action has likely built an area of support, as well as a pivot point, that will be highly important for months and perhaps years to come.

To the upside, the NASDAQ shows strong resistance on the daily closing chart at 3119/3122. Any close at or above that level will bring in additional buying with 3204 as the first objective. To the downside, the possible island formation will be important support and if closed (a drop down to 2979) would cause disappointment and bring in the seasonal selling that is anticipated to be seen in the "sell in May and go away" adage.

Like with all the indexes, the NASDAQ will likely pivot this week on the economic reports due out. Nonetheless, the probabilities favor the bulls and a resumption of the uptrend.

SPX Friday closing price - 1403

The SPX also generated a weekly classic reversal having gone below the previous week's low and closing above the previous week's high. In addition, the index closed above the 1400 level suggesting that the rally has some "teeth" to it. By the same token, the SPX continued to underperform the other indexes inasmuch as the index rallied this past week only 1.2% compared to 3% in the DOW and 2.3% in the NAZ suggesting that financial problems in the world continue to be the only "real" concern facing the market.

The SPX negated the confirmed break of the 50-day MA on Wednesday and closed near the highs of the week suggesting the bulls will be attempting to rally the index further this coming week in a new attempt to break above the highs seen May08 at 1440 and stimulate the buyers into being more aggressive.

On a weekly closing basis, resistance is minor to decent at 1408 and decent at 1425. On a daily closing basis, there is minor to decent resistance at 1409 and again at 1416. Above that level there is decent resistance at 1419. On a weekly closing basis, support is decent at 1363/1370. On a daily closing basis, support is minor at 1392, minor to decent at 1366 and decent at 1358.

The SPX is facing a slew of intra-week chart resistance levels this coming week starting with 1414, 1419, and 1422 (1409, 1416, and 1419 on a daily closing basis). If able to get above all of those levels, further resistance is found at 1425 and at 1440. As such, it is evident that something fundamentally "tangible" is required for all of those resistance levels to break. Nonetheless, having closed near the highs of the week it is likely the index will get above last week's high at 1406 and at least get up to the 1414 level where the first resistance comes into play.

To the downside, the SPX did generate a second green close confirming that the 1370 close seen 3 weeks ago was a successful retest of the breakout above last year's high weekly close at 1363, thus keeping the bulls in the "driver's seat". A close below the 1363/1370 level would now be a strong signal that a strong seasonal correction will occur but the probabilities have lessened of that happening after the rally the last 2 weeks.

There is a third scenario that could be seen this coming week that would make the SPX the index to watch. The index could end up making a new high for the year, much like what would probably happen with the other 2 indexes, but fail at the 1440 high seen in May08. Making a new high for the year in all the indexes would open the door to all kinds of upside objectives but in the SPX making a new high for the year would still leave the index with a clearly defined resistance at 1440 that the traders would key on to determine if the "sell in May and go away" adage would still be in effect. Simply stated, the 1440 level in the SPX could end up being the "defining" factor on what all indexes will do for the next 6 months.

The probabilities in the SPX for this coming week is for higher prices, nonetheless, where the index fails, if it fails, will be highly indicative as far as the overall outlook for the summer.

The bulls are back in control having received a slew of positive earnings reports that suggest corporate profits will continue to increase. Resumption of the uptrend is the most likely scenario but will be highly dependent on a couple of economic reports due out this week in the form of the ISM index on Tuesday and the Jobs report on Friday. Momentum to the upside, though, is back and in full force and the burden of proof is back on the shoulders of the bears.

From a purely technical perspective, if the reports due out this week are NOT negative, the probabilities of the uptrend resuming are medium to high. By the same token, even if the uptrend resumes the summer months are by nature slow suggesting that upside rallies would not be as "straight up" as they have been in the past and that choppy trading with much backing and filling would be seen.

Based on the action last week the bulls are committed to making new highs for the year and if the economic reports this week are deemed to be on the negative side "and" the indexes fail to make new yearly highs, the "sell in May and go away" scenario will be adopted fully by the traders and a decent to perhaps strong correction will occur. It is probable that all of this will be resolved by the end of the week.