DOW Friday closing price - 12977

The DOW generated a reversal signal having made a new 45-month high but closing in the red. In addition, the index tested the important weekly closing high seen in Apr08 at 13058 with an intra-week rally this past week to 13054, suggesting that selling is going to be found at that level and up to the intra-week high from the same period at 13132. The index traded in a directionless manner the entire week having traded around the 13000 demilitarized zone every day of the week.

The DOW is at a level where some catalyst is needed to jolt the traders into further action. The bulls do face the tougher task even though the trend and momentum is in their favor. Any further upside than the upside objectives mentioned over the past couple of weeks could signal that a new leg in the uptrend has begun. It is important to note that the overbought condition has diminished with the sideways trading seen over the past 2 weeks and that means that from a technical condition further upside can now occur.

On a weekly closing basis, resistance is decent at 13058. Above that level, there is minor resistance at 13695, minor to decent at 13907 and major at 14093. On a daily closing basis, there is minor resistance at 13005. On a weekly closing basis, support is minor 12800, minor again at 12217 and at 11934. On a daily closing basis, support is very minor at 12938, minor between 12780 and 12800, minor to decent at 12632, minor at 12584 and again at 12480.

The DOW ended up having an uneventful week even though most of the news that came out leaned toward the bearish side. The ISM index showed that a slowdown occurred in the month of February in manufacturing and Durable Goods showed that orders for products dropped considerably and into the red. In addition, the price of oil got up this past week to the critical level of $110, which is a price the analysts consider pivotal as far as its effect on the economy and GDP. The negative news was successful in throwing a bucket of cold water on the bulls, though it was unsuccessful in generating any movement downward.

The DOW continues to show strong intra-week resistance at 13132 and weekly close resistance at 13058. To the downside, a double intra-week low at 12882/12883 now exists that if broken would bring in new technical selling. Further minor to decent support is found at another double low at 12743/12753, as well as at the 12700 level which is considered psychological support.

The DOW has been trading in a very narrow trading range and it is likely that by the end of this coming week the index will break one way or the other. The only report that could be catalytic this week is the Jobs report that comes out on Friday. Nonetheless, it is not a report that is likely to be very much out of line so the traders may not wait for it. Oil prices are likely to have more of an effect on the index this week but then again only if they rise above $110 a barrel.

On the technical front, the seasonal correction seen in the DOW on 9 of the last 10 years has generally begun no later than the first week of March, as such it can be thought that last week's high at 13054 might be the high of the move. In 2006, though, when the index was in a major bull trend no seasonal correction occurred and that is still something that could happen this time around, especially since the index is no longer in a major overbought condition.

To the downside, the low last week at 12882 is a big key this week as a break of that support will likely start the dominos falling down, at least down to the 12700 level. A drop down to that level would effectively make it difficult for the bulls to turn the index back up and make new highs at least not until the next set of important economic reports come out in about a month.

The chart probabilities continue to favor the bulls but the fundamentals seem to be favoring the bears at this time.

NASDAQ Friday closing price - 2976

The NASDAQ accomplished the goal of reaching the 3000 level when it printed that price on Wednesday. No further upside was seen but the bulls can now say that they achieved their objective. The index did generate another new 12-year high weekly close and closed in the upper half of the week's trading range suggesting that further upside could occur. The index still has room to go higher this coming week as the weekly close resistance from the year 1999/2000 is up between 3028 and 3042.

The NASDAQ once again took the reins this week outperforming the other indexes to the upside. This is a positive note inasmuch as this index has led the parade during the past 4 years and leading them again after 3 weeks of falling back likely means further upside will be seen. The index did not generate a reversal as the DOW did and the probabilities do favor further upside being seen this coming week.

On a weekly closing basis, there is no resistance found over the past 10 years other than the psychological resistance at 3000. From the year 2000, there is weekly close resistance at 3204. On a daily closing basis, very minor resistance is found at 2988. No other resistance is found over the past 12 months. On a weekly closing basis, support is minor to decent between 2605 and 2616. On a daily closing basis, support is minor at 2961, at 2929, at 2915 and at 2904. Below that there is minor support 2873, minor again at 2805 and once again minor at 2763. Decent support is found at 2737.

The NASDAQ did generate a classic reversal on Wednesday when the index got up to 3000 but then closed in the red and at the previous day's low. The reversal came within 1 point of being a key reversal but some late buying prevented that from occurring. The reversal has so far been respected by the traders as the index was unable to get above 3000 the rest of the week. By the same token, no follow through do the downside was seen either, making Wednesday's trading range between 2961 and 3000 important for the short-term. Any break of either level is likely to generate follow through in that direction with the upside objective being as high as 3200 and the downside objective being as low as 2886.

The NASDAQ closed near the lows of the day on Friday and probabilities are high that follow through will be seen on Monday. Support is minor but important at 2961. Further minor support is found at 2933, 2922, and at 2911 and ultimately a bit stronger at the previous high at 2887. Resistance will be found at 3000 and then on an intra-week at 3028 and 3042. Nonetheless, no weekly closing resistance is found until the 3200 level.

Getting above and staying above the 3000 level is going to be very difficult without additional help fundamentally. The probabilities are very high that the NASDAQ will not accomplish such a feat at this time.

SPX Friday closing price - 1369

The SPX was successful in getting above last year's high at 1370 (got up to 1378) and close above last year's high weekly close at 1363. The feat was accomplished mostly on the fact that the traders decided to buy financial stocks this past week due to the depressed state of that industry and the continued good news regarding the loan to Greece. Nonetheless, the index had a classic reversal on Wednesday, much like the NASDAQ, and since then no follow through to the upside has been seen.

The SPX is likely to be the favored index for the next few weeks should the indexes be able to generate follow through to the upside this coming week. The index does not show any resistance close-by above and does have the largest percentage of stocks that are still considered to be at depressed prices due to the financial problems still existent in the world.

On a weekly closing basis, resistance is decent at 1395 and strong again at 1425. On a daily closing basis, resistance is minor at 1374 and then nothing for the last 12 months. On a weekly closing basis, support is minor at 1342, decent at 1268, minor at 1257, and decent again between 1216 and 1219. On a daily closing basis, support is minor but important between 1363 and 1365, minor to decent between 1342 and 1343, minor to decent at 1305/1306.

The SPX was at the "moment of truth" on the chart last week and the answer turned out to be a positive one as the index was able to clear the very strong resistance at 1370. The financial stocks responded accordingly with strong rallies as well. Nonetheless, the index must confirm the breakout this coming week with another close next Friday above 1363 in order for the breakout to be considered valid.

Indicative support on a daily closing basis is going to be 1363 as that was the previous high daily close for 2011. A close below that level would be considered as a failure to follow through signal. Nonetheless, no sell signal will be given until the SPX closes below 1342. To the upside, any rally above 1378 is likely to generate a rally up to 1400 and perhaps as high as 1425.

Based on what the SPX did this past week, the probabilities favor the upside.

The indexes gave mixed signals this past week with the DOW generating a negative reversal while the other indexes continued to generate further green closes. Nonetheless, the fundamental information that came out this week was mostly bearish suggesting that the reasons for a correction have increased as the economy seems to have reached a plateau and is likely on the way down, as well as the fact that most stocks also seem to have overshot their upside objectives and are prone for a correction.

There is very little fundamental news this week and even then the news of importance is not due out until Friday, leaving the traders to figure out what to do the rest of the week. Oil prices are likely to be a catalyst, especially if they get above $110 a barrel. Nonetheless, that has not yet happened even though that level was seen this past week. By the same token, the traders will be keying on oil prices as that is the only thing that is likely to be in the news at the beginning of the week.

The seasonal correction is also likely to be in the trader's minds as the correction usually starts before the second week of March and that means that last week could turn out to be "it". The indexes are likely to start the week lower due to the sell-off on Friday. Nonetheless, the bears still have their "work cut out for them" as all dips have been bought for the last 3 months and that is not going to change without some catalyst occurring.