DOW Friday closing price - 13610

The DOW made a new 57-month high weekly close on Friday, closing above the previous weekly high at 13593 mainly due to a better than expected Jobs report. Nonetheless the index had already begun to rally since Monday when the ISM Index report also came in better than expected and the Jobs reports simply nudged the index higher. Neither of the reports came in substantially better than expected suggesting that the economy is still going through a very slow patch of growth that is not likely to change any time soon, but compared with the alternatives the traders would rather be buyers than sellers at this time.

Chart-wise and based on the weekly closing chart, the DOW is still facing an uphill battle as the area between 13625 and 13669 offers quite a bit of resistance that is not likely to get broken at this time. Fundamentally, there are not enough reasons for the index to further generate a strong rally from these levels and the probabilities highly favor the index trading sideways with a slight downward bias toward the 13000 level during the next 4-12 weeks.

On a weekly closing basis, resistance is minor to decent between 13625 and 13669, decent at 13907 and major at 14093. On a daily closing basis, there is no resistance shown during the last 12 months. On a weekly closing basis, support is minor 13437, minor to decent at 13090, minor at 12922, and minor to decent at 12849. On a daily closing basis, support is minor at 13413, minor to decent at 13090, minor at 13046/13057, and minor to decent again at 13000.

Due to the slightly better than expected economic reports this past week, the DOW was able to negate the double top that had been built on the intra-week chart at 13653/13647 (13593 and 13596 on the daily closing chart), taking away one of the decent chart tools the bears had for trying to generate some downward action. In addition, with the new 57-month high made on Friday, the low at 13367 seen a week ago Friday has now been confirmed as a successful retest of the breakout above the previous high for the year seen in May at 13338, suggesting that a new leg to the uptrend is now beginning.

It should also be mentioned that the DOW broke above the top of a bullish flag formation on Friday with the Flagpole being the 2-week rally from 12978 up to 13653 and the flag being the trading range the last 3 weeks between 13367 and 13653. The objective of the flag formation is 14042. With no major economic news due out for the next few weeks and the new earnings quarter that generally offers additional buying support beginning on Tuesday, the probabilities are now in favor of further upside and perhaps of consequence.

To the downside, the DOW will now show decent to perhaps even strong support at the 13338/13367 level that is not likely to get broken unless some new negative fundamentals come out. It should also be mentioned that having broken out of the bullish flag formation on Friday, the previous daily close at 13593/13596 should be considered minor to decent support. This is especially true since flag formations have strict guidelines and one of them is immediate follow through to the upside without any pullback until the objective is reached.

It should be mentioned that the other indexes did not accomplish what the DOW accomplished this past week and for that reason alone the breakout is suspect. In addition, the index definitely shows clear weekly close resistance between 13625 and 13669 (though it must be mentioned that resistance is "old" as it is from 2007) and it is not going to be easy for the bulls to fundamentally break above those levels with the current economic conditions found. As such, there are a lot of questions that will need to be answered this week in order for the traders to buy aggressively and fulfill the chart parameters in place. The AA earnings report that kicks in the new earnings quarter comes out on Tuesday and the traders will closely watch that report for clues. By the same token, there are no other earnings or economic reports of consequence due out this week and that means that much will likely be decided technically and probably no later than the close of the market on Tuesday.

Technically the bulls have the upper hand in the DOW chart but fundamentally problems remain that will keep the traders buying gingerly. If by Tuesday the positive chart events mentioned above do not get the follow through to the upside required, the traders will lose their interest in the indexes for the rest of the week and the old resistance levels from 2007 will come into play. If the index does get enough buying at the beginning of the week and the AA report on Tuesday is not bearish, the index could see 14000 this coming week. Much will depend on the trading on Monday and Tuesday.

NASDAQ Friday closing price - 3136

The NASDAQ was able to generate a green weekly close making last week's close at 3116 into a possible successful retest of the previous high weekly close at 3091. Nonetheless, unlike the DOW that made a new 57-month high, the index was unable to even get close to the old high at 3198 having had an inside week and a 3171 high. In addition, the bulls even failed to close the possible breakaway gap between 3176 and 3178 in spite of the buying interest seen in the market this past week. The lack of buying interest, in comparison to the DOW, has to be considered a negative inasmuch as the index has been the leader to the upside for most of the last 4 years and failing to carry that leadership this week is suggestive that the overall buying interest is not that high.

In addition, the NASDAQ generated a reversal day on Friday having made a new 7-day high but then closing in the red and on the lows of the day suggesting that further downside will be seen on Monday. Much of the negative action was due to the #1 stock in the world (AAPL) giving a sell signal on the daily closing chart on Friday. If AAPL cannot continue to go higher with everything fundamentally and chart-wise going in its favor, the possibilities of the market going higher has to diminish strongly.

On a weekly closing basis, there is minor resistance at 3183 and minor to decent at 3205. On a daily closing basis, resistance is minor at 3149 and decent at 3183/3182. On a weekly closing basis, support is minor at 3116, very minor at 3066, and minor to perhaps decent at 3000. Below that, minor support is found at 2908 and minor to decent at 2778. On a daily closing basis, support is minor at 3104 and again at 3093, minor to perhaps decent at 3048/3053, and minor to decent between 2976 and 2991.

The chart formations in the NASDAQ (double top, gap, and a haphazard Head & Shoulders) has a lot of negative possibilities suggesting that a drop below 3000, perhaps as low as the 200-day MA, currently at 2940, could be seen over the next 4-8 weeks. In addition, the reversal day on Friday after an attempt to close the gap between 3176 and 3178 with a rally up to 3171 has to be considered a short-term negative sign. Nonetheless, until the index closes convincingly below the 50-day MA, currently at 3077, as well as breaks the low for the past 5 weeks at 3080, nothing negative of consequence will have occurred.

Friday's action in the NASDAQ has to be considered a direct opposite to what was seen in the DOW leaving the traders unsure of what index to follow this coming week. By the same token and generally speaking, the NASDAQ represents speculative buying interest while buying the DOW represents a flight to the safety of "blue chip" stocks. Under that scenario it would have to be said that the probabilities favor the market being close to a short-term top as it is difficult to generate much additional upward movement if the money is mostly concentrated in one sector of the market alone.

To the downside, the NASDAQ should see some follow through selling on Monday as the index closed near the lows of the day and there is no support on the intra-week chart until 3100 is reached. The index does show some minor daily close support at 3113 and at 3104 but the probabilities do favor those levels being at least seen this coming week. It should be mentioned that the index had an inside week and a close right on the middle of the week's trading range, meaning that based on the weekly chart there is no probability number in either direction. Nonetheless, having closed near the lows of the day on Friday, there is a definite probability that the lows of the week last week at 3101 will be tested "first". Below 3100, there is an important support at 3080 which is the low for the past 5 weeks and is also where the 50-day MA is currently located. A break and close below both of those levels will likely cause the index to drop down at least to 3000.

Resistance is now Friday's high at 3171 as well as the bottom of the breakaway gap at 3176. Further resistance is found at 3193/3195 and again at 3205, though the 3205 resistance is only on a weekly closing basis. The action on Friday was quite negative, especially considering what the DOW did and the fact the fundamental news was considered positive. Nonetheless, the tech sector seems to be under some selling pressure and it is unlikely that sector will recover until some new earnings reports come out. AAPL and AMZN earnings report are not due out until October 25th. The chart suggests the NASDAQ will move down to 3098 this coming week and then likely generate a bounce back up to the 3156 level. Based on this scenario, there will likely be a bit more red than green throughout the week but not in a big meaningful way. By the same token, if this scenario does occur, it is unlikely the DOW will have the upside follow through its chart suggests will happen.

SPX Friday closing price - 1460

The SPX ended up having a positive week but nowhere near as positive as the DOW did, inasmuch as the index did close out the week near the highs of the week but failed to get above the intra-week high made 2 weeks ago at 1474 or close above the 57-month weekly closing high at 1465. In addition, the close on Friday has to be considered a negative inasmuch the index got up as high at 1470 but then reversed to close in the red and near the lows of the day suggesting the first course of action this coming week will be to the downside.

The SPX should be leading the way up as all the fundamental events the past few weeks have been tailored to help the financial sector recover. Nonetheless, the old weekly close resistance between 1474 and 1478 has held firm and though the DOW was able to make new 57-month highs on Friday it was not sufficient to get the index to do the same, suggesting that the bulls are not totally convinced that fundamentally or technically there is further to go to the upside until the other fundamental problems facing the market over the next 3 months are solved.

On a weekly closing basis, resistance is minor at 1465, minor to perhaps decent at 1504, decent to strong at 1552, and major at 1561. On a daily closing basis, resistance is minor at 1461 and decent at 1465. On a weekly closing basis, support is minor at 1440 and decent at 1406. On a daily closing basis, support is minor at 1433 and minor to decent at 1399/1402. Below that level, minor but indicative support is found at 1363/1366, minor to decent at 1358, minor to decent again at 1343 and at 1334.

The SPX did close in the upper half of the week's trading range and follow through to the upside is expected with 1478 as a possible week's upside objective. By the same token, the index is likely to start out the week on a negative note based on Friday's negative reversal and close on the lows of the day and is not likely to recover until Wednesday after the AA earnings report is out. If the AA report does not come out positive, there are no other scheduled fundamental events that could act as a catalyst and therefore the action seen at the beginning of the week could influence the trading the rest of the week.

Like the DOW, the SPX is also showing a bullish flag formation that if broken (a rally above 1474) would give a 1508 objective. By the same token, unlike the DOW the index did not break above the top of the flag last week and therefore no failure signal will be given if the index falls back. The index could easily trade sideways for the next week between the top of the flag at 1474 and the bottom of the flag at 1430 without meaning much. The traders could wait until the important financial company's earnings reports start coming out a week from Monday.

As far as support is concerned, the bottom of the flag was the low seen the previous week at 1430 and that will be considered a decent intra-week support level this coming week. Some minor support is found at 1449 but the key word is minor. By the same token, if 1449 is broken on Monday or Tuesday, the probabilities of the index getting above the 1474 high will diminish substantially. A break below 1430 would not be a big negative as the 50-day MA is found at 1420 and the previous high for the year at 1422, meaning that a break down to that level would keep the bullish flag in place as well as no failure signal would be given.

To the upside, Friday's high at 1470 has to be considered indicative resistance inasmuch as the SPX saw good selling come in at that price on Friday, The 1474/1478 area is still considered decent resistance. Nonetheless, above that level there is nothing of consequence until the psychological resistance at 1500 is reached.

The SPX is stuck in a trading range between 1420 and 1478 that is difficult to evaluate. The index is into new 57-month highs but has not been able to follow through to the 1500 level, as had been expected. There is no scheduled fundamental news this week that will help the traders make a decision so the probabilities favor more of the same this week without anything additional getting decided. The probabilities continue to favor the bulls inasmuch as the index has accomplished something to the upside but nothing to the downside other than the inability to go higher. By the same token, it is evident the traders are looking for more positive fundamental news before buying anew.

The indexes are giving mixed signals with the DOW suggesting further upside is likely to be seen this coming week and the NASDAQ suggesting the opposite, with the SPX somewhat stuck in the middle. The lack of consistency in the signals between the indexes would suggest the probabilities favor the downside as the buying seems to be concentrated in a small portion of the market that is mostly "safe keeping" (30 Blue Chip stocks) rather than new speculative buying.

There are no major economic or earnings reports due out this week and that will leave the traders with a dearth of information to trade off of. AA does kick off the earnings quarter on Tuesday but AA has lost a lot of its predictive power over the past 5 years and with no other earnings reports of consequence due out this coming week it does suggest the traders will likely do nothing than speculate on a strong direction.

By the same token, the traders are faced with scheduled negative events, such as the Fiscal Cliff, that will occur at the end of the year and beginning of next year and are more likely to liquidate positions instead of buying in the face of that. The economic reports this past week were better than expected but not enough to believe things are much better, suggesting that strong buying is not a high probability. As such, the market is likely to drift this coming week with a slight downward bias. Nonetheless, the chart picture remains positive and until that gets negated the traders are likely to wait for another time before liquidating long positions. Simply stated, more of the same is likely to be seen this week.