DOW Friday closing price - 13328

The DOW gave a sell signal on the weekly closing chart closing below the low weekly close for the last 5 weeks at 13437. Nonetheless, the sell signal was not confirmed when the index was able to close above the previous high weekly close for the year at 13232/13275, meaning that the uptrend has not yet been broken but that the index will need fundamental help this week to generate new buying and a rally back up to at least the recent highs.

The mood has changed in the DOW as the bullishness felt as little as a week ago has now been replaced with trepidation that the Fed now has done all it can to stimulate the economy and that further weakening of GDP will be seen. In addition, problems in Europe continue as Greece gets closer to what seems to be an inevitable exit from the Euro suggesting that more problems, rather than less, will have to be faced in the coming months.

On a weekly closing basis, resistance is decent at 13593/13610, minor to decent between 13625 and 13669, decent at 13907 and major at 14093. On a daily closing basis, there is very minor resistance at 13413 and decent resistance at 13593/13610. On a weekly closing basis, support is minor 13232/13275, minor to decent at 13090, minor at 12922, and minor to decent at 12849. On a daily closing basis, support is minor to decent between 13232 and 13275, minor to decent at 13090, minor at 13046/13057, and minor to decent again at 13000.

The DOW was unable to follow through on the previous week's new 57-month intra-week and daily closing high starting the week at the same price it closed on a week ago Friday and heading lower the rest of the week. A confirmed double top on the daily closing chart at 13593/13610 is now in place and that double top was further strengthened when the index made a new 4-week low below a short-term support of some consequence at 13367. The bulls were able to prevent a failure to follow through signal from being given when the index closed on Friday above the previous 51-month weekly and daily closing high seen in May at 13279 but find themselves on the defensive and needing positive earnings reports to prevent further downside from occurring.

The short-term uptrend that started in the DOW the last week of July is still in place as the 50-day MA, currently at 13320, held up on Thursday and Friday but the index did close just a couple of points above the level on Friday and if a red close is seen on Monday it will be broken and new selling is likely to be seen. The 50-day MA is always a good indicator of whether a trend is still in place or broken. It is evident the traders are waiting for further earnings reports to make that determination. In addition, the DOW finds itself at what has to be considered an important mid-term pivot point at 13300. Intra-week support is found all the way down to 13250 but any break below that level, especially on a daily closing basis, would energize the bears and likely cause further selling to occur.

A daily close below 13232 will bring new selling pressure and will likely cause the index do drop down to at least 13000 and probably down to the 12700 level which will become a viable and likely objective for the next 3 months should the index give a failure to follow through signal. If the DOW does give a failure to follow through signal the probabilities would be high that a 12700 to 13300 trading range will be seen for the rest of the year.

To the upside, the DOW does not show any intra-week resistance until the 13598/13647 area. As such, should the bulls be successful in holding above the 13300 level this week, a rally of some 300 points will likely be seen over the next 2-3 weeks. Any daily close at or above 13593/13610 will re-stimulate the bulls and cause new buying to appear with 14000 as the objective.

The week will kick off with Retail Sales at 8:30am on Monday and it is possible that it will be a determining factor for the week. By the same token, GS, IBM, BAC, and GOOG report this week and they will also have some impact. Other catalytic earnings reports, such as AAPL and AMZN, are not due out until the following week. For the next 2-3 weeks the DOW will likely move based on fundamental information and not on technical/chart trading. No probability numbers are available for this week though the bears do have a very slight edge based on the sell signal given.

NASDAQ Friday closing price - 3044

The NASDAQ continues to see the bulk of selling having dropped 3% in price this week compared with 2% in the other indexes. With traders keying their selling in the NASDAQ it suggests that the indexes have found at least a mid-term top as this index has been the leader to the upside during the past 4 years. This is further strengthened with the fact that the index gave a failure to follow through signal on Friday having closed below the previous 13-year high weekly close at 3091.

The NASDAQ also generated a confirmed break of the 50-day MA, currently at 3090, having broken the line on Tuesday and following that up with 3 additional red closes in a row suggesting that the uptrend has been broken and that a sideways trend is now in place. The index did close on the lows of the week also suggesting that further downside will be seen this coming week with 3000 as a near-term objective.

On a weekly closing basis, there is minor to perhaps decent resistance at 3091, minor at 3136 and decent at 3183. On a daily closing basis, resistance is minor at 3069, decent at 3091 and again at 3149 and decent to perhaps strong at 3183/3182. On a weekly closing basis, support is minor at 3000 and then nothing until minor support again at 2908. Stronger support is found 2873 and at 2847. On a daily closing basis, support is minor to decent between 2976 and 2991.

Based on purely chart factors, the NASDAQ has built just about every possible negative chart formation in the book starting with the Double Top at 3193/3195, the confirmed breakaway/runaway gap formation, the break of the 50-day MA, and the break of the neckline of the haphazard Head & Shoulders formation that has a 2975 objective. In addition, the close on Friday below 3091 also gave a failure to follow through signal on the weekly closing chart. To finish it off, the index closed on the lows of the week and follow through to the downside is likely to be seen this coming week putting the index on the defensive and far away from the recent 13-year highs.

To the upside, the NASDAQ shows minor to decent resistance at the high made on May 1st at 3085. That area is further strengthened by the fact that the 50-day MA that was broken this past week is currently at 3090. Further resistance on a daily closing basis is found at 3093 which is the level that was broken this past week that gave the sell signal as well as being the neckline of the H&S formation that was also broken this past week. As such, rallies in the index are likely to run into strong technical selling between 3085 and 3093. The chart of the NASDAQ is now considered short-term bearish unlike the other indexes that are still undecided.

The NASDAQ, like the other indexes, will still depend on the economic and earnings reports due out over the next 2 weeks. GOOG reports this week but AMZN and AAPL report the following week and during this period of time until all those reports are out it is unlikely that any concerted aggressive selling will be seen. As such, the probabilities are high that the index will trade the next week or two in about a 100 point trading range between 2985 and 3085. Having closed on Friday at 3044 it does mean that the index finds itself in the middle of that trading range and that this coming week both red and green will be seen and probably in equal amounts.

In looking at the probabilities of what the NASDAQ will do for the rest of the year, it is likely that the previous 13-year weekly closing high made in April of this year at 2873 is the objective. That is further supported by the fact that the 50-week MA is currently at 2900. The index is still in a long-term major uptrend and though the short-term uptrend has stalled the long-term uptrend has not yet suffered any setback and it is not likely to do so until the year is over and the Fiscal Cliff is addressed.

SPX Friday closing price - 1428

The SPX gave a short-term sell signal having closed on Friday below the most recent low close at 1440. Nonetheless, the index still closed above the previous high close for the year at 1408 as well as above the 54-month high weekly close at 1425 that was seen in May08, suggesting that the traders are not yet convinced that the longer term uptrend is over.

The SPX did close on the lows of the week and further downside, at least on an intra-week basis, is likely to be seen this coming week with 1400 as the intra-week objective. Nonetheless, the large portion of the strong financial companies such as GS and BAC will be reporting this week meaning that technical factors will be taking a back seat to the fundamentals.

On a weekly closing basis, resistance is minor at 1460 and minor to decent at 1465. On a daily closing basis, resistance is very minor at 1437 and at 1447, minor at 1461 and decent at 1465. On a weekly closing basis, support is decent at 1406. On a daily closing basis, support is 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 closed on Friday at the 50-day MA, currently at 1428, and that means that Monday's close is going to be all about red or green. By the same token, the strongest financial company (GS) reports on Tuesday before the opening and anything that happens on Monday could be reversed on Tuesday after that report comes out. WFC and JPM reported on Friday and they both came in better than expected but it did not help the index generate a green close so the reports due out this week could end up having the same effect. Nonetheless, it is likely the traders will wait until those reports come out to make any decisions.

To the downside, the SPX does not show any support of consequence on either the daily or weekly chart until 1397/1400 is reached. As such, if there is follow through to the downside on Monday and the GS report on Tuesday is not much better than expected the index is likely to have a strong 28 point drop in price this coming week. Additional support below 1397 is found at 1387 which is also where the 100-day MA is currently at.

To the upside, the SPX shows only very minor resistance at 1443, 1450, and 1457 before the stronger resistance at 1460 and 1470/1474 is reached. It is likely that if the index gets above 1443 that a rally up close to 1457/1460 will be seen.

The earnings reports in the financial community have not proven to be very important in the past few quarters and therefore it is likely that the SPX will be depending on what the other indexes do this coming week. The SPX has generally been a follower rather than a leader over the past few years, especially when it comes to the upside. I don't see that changing this week.

It is evident that the SPX is at a short-term important pivot point as there is no chart support on an intra-week basis until 1400 is reached. If the index follows through on the weak close on Friday the bulls will be in trouble.

The indexes failed to follow through to the upside after the previous week's strong close and the bears took advantage causing the market to fall and close on the lows of the week suggesting further downside will be seen. Nonetheless, the indexes are at pivotal chart points that could bring technical buying or selling depending on which direction is seen now. The indexes are into the first 3 weeks of the earnings quarter which normally helps generate rallies. Earnings are expected to be down from the last quarter and that is one of the reasons for the selling pressure being seen at this time. Nonetheless, the selling pressure is dependent on earnings coming in worse than expected and so far the "few" earnings reports that have come out have not supported that view.

Retail Sales report is due out on Monday before the opening of the market and may help set the tone for the week as the most important earnings reports for the quarter are not due out until the following week. Nonetheless, with the indexes at pivotal points it won't take much to push the market in one direction or the other. Earnings, though, will be the key this week.