The DOW confirmed that a double top now exists on the weekly closing chart with a second red close in a row. By the same token, no weekly close support level has yet been broken, such as the minor weekly close support at 13080, leaving the traders with only a slight bearish undertone entering this coming week but no clear technical direction.

The DOW did generate a technical and fundamental rally on Friday after getting down to the decent psychological and intra-week support at the 13000 demilitarized zone and generating a decent bounce off of that level. The rally was further fueled by comments made at the Central Bank meeting on Friday in which the Fed Chief left the door open for further stimulus "should the market action require such an event". Traders believe that if such action is required it will be announced at the next rate decision meeting on September 13th.

On a weekly closing basis, resistance is minor at 13228/13232 and minor to decent at 13275. Above that level, there is minor resistance at 13625, decent resistance at 13907 and major at 14093. On a daily closing basis, resistance is minor between 13107 and 13126 and minor again at 13157. Above that level there is minor resistance at 13207, decent at 13252/13264, and strong at 13279. On a weekly closing basis, support is minor at 12922, and minor to decent at 12849. Below that level, support is minor at 12772, minor again at 12640 and decent at to perhaps strong at 12611. On a daily closing basis, support is minor at 13046/13057, minor to perhaps decent at 13000, minor at 12927, minor to decent at 12878 and again at 12715.

The DOW closed out the week slightly in the upper half of the day's and week's trading range suggesting that there is more of a possibility of the index trading higher than lower at the beginning of the week. Last week's high was 13151 and with no previous intra-week resistance at that level it stands to reason that the index will likely trade higher at the beginning of the week. By the same token, the ISM Index report, one of the strong economic reports for the month, will come out Tuesday at 10:00am and it is anticipated to come out at 50. A lower reading will have a negative impact, then again it will also stimulate further thoughts that the Fed will decide on further stimulus on 9/13, suggesting that even a negative report might not create that strong of a drop even though a reading under 50 does mean recession.

The b>DOW has been showing consistent failure signals inasmuch as rallies have not gone very far. No clear retest of the recent double top high at 13330 has yet been seen. Intra-week resistance is seen at 13175 but it is considered minor. If that level is broken to the upside, a rally up to the 13300 level is likely to be seen. By the same token, other than the possibility of the Fed generating more stimulus, there doesn't seem to be any reason to rally the indexes and certainly if the ISM index report comes in below 50 it will put added pressure on the bulls and likely prevent them from generating any rally unless the Fed does announce a new stimulus package.

Support in the b>DOW is found at the bottom of the 13000 demilitarized zone (12970) but if broken no intra-week support is found until 12778. The 50-day MA is currently at 12940 but with the inability of the bulls to rally the index the last 2 weeks it cannot even be said that the index is trading in a short-term sideways pattern and that means that if 12970 is broken the index will likely drop down to the 12700 area.

Probabilities for this week, based on Friday's action, suggest the b>DOW will trade higher at the beginning of the week but it will likely all depend on the ISM Index report on Tuesday at 10:00am. A number under 50 will keep the short-term downtrend intact, a number above 50 will likely generate enough buying to put the index into a short-term sideways trend with 13300 as the upside objective for the week.

NASDAQ Friday closing price - 3066

The NASDAQ spun its wheels this past week and ended up closing just 3 points below last week's close leaving the door wide open for either side to accomplish something this coming week, likely depending on the economic reports due out. In addition, it cannot be said that even though the weekly close the last 2 weeks has been in the red that the close 2 weeks ago at 3076 was undeniably confirmed as a successful retest of the 3091 13-year high weekly close. The reason is simple as the last 2 red closes have only added up to a drop of 10 points from the weekly close 2 weeks ago Friday. Such action belies the fact that the traders continue to wait for further news before taking a direction. With the index still considered the leader to the upside, it does suggest that the weakness seen in the other 2 indexes is not significant yet.

The NASDAQ has had 3 green monthly closes in a row but the previous 13-year high monthly close seen in March at 3091 was not broken on Friday (the close for the month) and that also means that the traders are leaving the decision on what to do to what happens over the next 2 weeks. The index did close near the top of the monthly trading range suggesting follow through to new 13-year highs will be seen this coming month. By the same token, the index also closed near the highs of the month in March and no follow through was seen so it is possible the same thing will occur this month.

On a weekly closing basis, resistance is decent to strong at 3091. Above that level there is no resistance shown on the weekly chart for the last 10 years. On a daily closing basis, resistance is minor at 3076, minor to decent at 3081 and decent to strong at 3119/3122. On a weekly closing basis, support is minor at 2908 and minor to decent at 2778. On a daily closing basis, support is minor at 3048/3053, minor to decent between 2976 and 2991, minor to decent again at 2961, and then decent at 2909.

For the last 2 weeks, the NASDAQ has been trading sideways in a very narrow trading range between 3040 and 3100. It is evident that a break of either of those 2 levels will be short-term indicative. Nonetheless, it is the monthly chart that will play a very important role in September as a break above the 13-year intra-month high at 3134 will likely push the index higher up to at least the 3400 level, while a break below last month's low at 2890 will likely mean a mid-term top has been built and that a drop down to at least the 2400 level is likely to be seen. As such, the traders are likely to key on the action the first 2 weeks of September trying to figure out which direction is the most probable.

On a shorter term basis, a drop in the NASDAQ below 3040 will probably cause the index to drop down to 3000. A break below 2999 will probably take the index down to 2870/2975 where some decent intra-week support, as well as the 50-day MA, is currently located. The index did close on the highs of the day on Friday and the probabilities favor further upside above Friday's high at 3078 to be seen on Monday. Further resistance is found at 3087 and at 3100.

SPX Friday closing price - 1406

The SPX confirmed the failure to follow through signal given the past week with a second red close in a row and below the previous high weekly close at 1408. Nonetheless, until the index generates a convincing weekly close below 1400 the signals given have limited strength leaving the door open for the bulls to turn things around with any kind of positive news.

The SPX has generated 19 daily closes in a row above 1400 but on a negative note has not yet been able to close above the 1426 high daily close from May 19th 2008, suggesting that the traders "need" something positively tangible to occur in order for that to happen. With fundamentals pointing to continued slow-down in the economy and financial problems still stifling the Europeans, it is evident that if this recent 3-week trend continues that the end result will be a profit-taking sell-off as traders are unlikely to keep their long positions unless profits are being made.

On a weekly closing basis, resistance is decent to strong at 1425. Above that level, no resistance of consequence is found until the 1500 area is reached. On a daily closing basis, resistance is minor at 1410 and strong at 1419. On a weekly closing basis, support is very minor at 1354, minor at 1335 and decent 1278/1279. On a daily closing basis, support is minor at 1399/1402, minor but indicative at 1363/1366, minor to decent at 1358, minor to decent again at 1343 and at 1334.

The SPX has begun to slowly (but minimally) deteriorate as the low daily closes for the last 19 days have been lower than the previous ones (1403, 1402, and 1399). In addition, the higher daily closes have also been lower than the previous ones with 1418, 1411 and 1410 being seen during the same period of time. If nothing changes this coming week and the most recent low daily close at 1399 is broken, the traders are likely to lean a bit stronger on the sell side. Minor intra-week support is found at 1395 and again at 1385, but below that there is no intra-week support until decent support is found at 1357.

To the upside, the SPX is showing the same weakness as the DOW as the index has not yet tested the high seen over the last 3 weeks at 1426. Intra-week resistance is found at 1413 and at 1416 but if broken a rally up to 1422 is likely to occur.

As mentioned above, the SPX needs some tangible and positive fundamental news to be successful in breaking the slightly negative bias that has begun to be seen. The ISM index and the Jobs report this coming week can certainly be considered catalysts but it is unlikely those reports will be way out of line. As such, it is possible, and perhaps even likely, that the traders will wait until the next Rate Decision meeting on September 13th before making a determination.

Probabilities favor further deterioration in the meantime with 1385 as a likely downside objective to be seen before September 13th.

The indexes have been slowly and minimally deteriorating over the past 3 weeks but no signals of consequence have yet been given. More of the same seems to be in order for this week, though a couple of important reports are due out that could make a difference. The ISM Index report comes out Tuesday at 10:00am and the Jobs report comes out on Friday and both of these reports are the prime indicators of how the economy is doing. By the same token, it is clearly evident that the traders are waiting to see if the Fed announces a new stimulus package and no matter what the reports say this week, the probabilities favor the traders doing nothing of consequence until the September 13th Rate Decision meeting.

It should be noted that in 8 of the last 11 years the indexes have gone down in September and in 2 of the 3 years the indexes went up the market was on an immediate strong uptrend at the time, which is not the case here now. As such, a lack of positive news will greatly increase the probabilities of the seasonal tendency coming into play this year as well.