DOW Friday closing price - 12922

The DOW generated a second red weekly close in a row on Friday, the first in 6 months, increasing the probabilities that the index has found a top to this rally. Nonetheless, the index rallied from the lows to close near the highs of the week suggesting that the issue is still under discussion as it wouldn't take much of a rally this coming week to get above the 4-year highs.

The DOW has been unable to generate any clear chart signals, other than not breaking above the highs seen in Apr08, as the uncertainty regarding the Greek loans kept the traders at bay. Nonetheless, that issue is now totally resolved (at least for the short-term) and the index will be able to generate a chart signal this coming week, in one way or another.

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 12980 and minor to decent at 13005. On a weekly closing basis, support is minor to decent at 12801, minor again at 12217 and at 11934. On a daily closing basis, support is minor to decent between 12759 and 12780, minor to decent again at 12632, minor at 12584 and again at 12480.

The DOW did close in the upper part of the week's trading range and that normally means that some follow through to the upside, above last week's high a 12774 should be seen this coming week. Possible upside objective is 13027 where some previous intra-week resistance is found, nonetheless, based on the inability of the index to generate further action on Friday getting up to that level and then breaking may prove to be difficult to accomplish.

The DOW could be in the process of building a Head & Shoulders formation with the left shoulder being the high seen on February 9th at 12924, the head being the high seen on February 29th at 13055, and the left shoulder being Friday's high at 12977, or whatever high is seen this coming week if the 13055 is not reached or surpassed. The necklines would be the low seen on February 10th at 12743 and the low seen last Tuesday at 12734. The H&S formation is still in doubt as the right shoulder has not yet been built. Nonetheless, Friday's failure to go higher, as well as the red close, does increase the possibilities the formation will be formed. A break of the neckline at 12734 would give an objective of a drop down to at least 12422.

It should also be mentioned that the always important 50-day MA is currently at 12725 and that gives that level added importance as the 50-day MA has held well since it was first broken in October. There was one brief break after that, back in November, at the height of the daily comments about the Greek loan. Nonetheless, those kinds of breaks are not indicative as they are not chart motivated but fear driven. A break of 50-day MA under the current conditions would be highly indicative that a correction is ongoing.

One possible clue as to what will happen this coming week in the DOW could be seen on Monday. The index closed near the lows of the day on Friday and there are no scheduled reports or news scheduled until Tuesday that could give the bulls ammunition to come in Monday with strength. A move below Friday's low at 12906 will increase the probabilities of the H&S formation getting formed, especially if Monday's close is in the red by as much as 10 points. Such as scenario would then require more good news during the week to negate the chart selling that would be seen off of that kind of event. There are a slew of "B" kinds of economic reports due out this week with Retail Sales on Tuesday likely being the most important. Nonetheless, the chart aspects of trading are more likely to take center stage this week than any of the reports due out.

I believe the DOW will fail this week and end up getting down to the 12700 level but likely not closing below the 50-day MA, at least not until the following week.

NASDAQ Friday closing price - 2988

The NASDAQ continued leading the pack this past week making yet another new 12-year weekly closing high. The index outperformed both the DOW and the SPX being the only index to close firmly higher than the previous week and on the highs of the week, suggesting that at least in this index further upside will be seen this coming week.

The NASDAQ has a clear objective of testing the major 1-year intra-month low seen in May00 at 3042, which came after the index climbed up to 5132 that year. That 3042 support level was the level that "broke the camel's back" and that ended up taking the index down to its 16-year low at 1108 two years later. Testing that level seems to be the goal the bulls have set themselves on. It is highly unlikely that level will be broken at this time without further improvement in the economy, but being so close to that level the probabilities of it being seen are high, especially since the index was able to extend its recent impressive 5-month rally this past 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 a low weekly close resistance of decent to strong importance 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 2933 and decent at 2910. 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 had a week with some important chart events inasmuch as the index generated a gap up between 2940 and 2945 and follow through on Friday, up to the previous daily closing high at 2988. The gap and subsequent follow through the following day, as well as the close on the highs of the day/week on Friday has committed the bulls to thrust the index up above the 3000 level on Monday. Any failure to do that will make the 2940/2945 gap an immediate magnet and likely to be closed as soon as Tuesday, causing strong disappointment as well as a failure to follow through signal. In addition, if the index closes in the red on Monday it will create a strong double top at that level that would be difficult to break without some strong fundamental reason to do so. At 3000, it is hard to find a strong fundamental reason for the index to continue to move higher. Nonetheless, from a purely chart point of view, the probabilities do favor the bulls being successful in taking the NASDAQ into a new 12-year high and testing the 3042 level from the year 2000.

To the downside, the NASDAQ now shows a new support level of some consequence that the bulls can depend on as the index did drop down close to 4% in value this past week when it fell down to the 2900 area and bounced up in a strong way. Such a drop can be considered a minimal correction but a correction nonetheless, much like the one that occurred in 2006 when the indexes had the one exception to the seasonal correction seen 9 out of the last 10 years. Having a support level that has some dependability close-by should help the bulls push the index higher this coming week. By the same token, any failure to do show follow through this coming week will be highly indicative of weakness, and weakness of some consequence. Simply speaking, there is no reason chart-wise for the index to fail to achieve the 3042 level this coming week.

To the downside, should the 2900 level break decisively, the NASDAQ could show drops down as low as 2600, or even down to 2500 if the correction gathers momentum.

Monday is likely to be important as the bulls are committed to the upside but the other indexes are not. As such, it will be up to the NASDAQ to carry the load.

SPX Friday closing price - 1370

The SPX was able to generate a green weekly close but by the most minimal margin (less than 1 point). The index did close on the highs of the week and further upside is expected to be seen with the previous week's high at 1378 the immediate objective. Should the index be successful in breaking that level, rallies up to 1400 will likely occur, taking the index up to the important support levels seen in 2007 as well as a decent resistance level from Jan08. Nonetheless, on an intra-week basis, the 1370 level also holds some importance as those were the intra-week lows (double bottom at the time) seen in March and August 2007.

The SPX seems to be the pivot index from the point of view that the DOW seems to be leaning toward the downside while the NAZ seems to be leaning to the upside. With 1378 being the recent high and if broken no resistance is found until 1395, it is likely this index will be the deciding factor on what the rest of the market does this coming week.

On a weekly closing basis, resistance is decent at 1395 and strong again at 1425. On a daily closing basis, resistance is minor to decent 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 very minor at 1365 and again at 1357. Support is decent and likely indicative at 1343 and then minor to decent at 1305/1306.

The SPX is at a short-term pivotal point as the index closed 4 points below the high daily close for the last 46 month at 1374, seen just 1 week ago. Any red close this coming week before a close above 1374 is made will be seen as a successful retest of that level and new selling will likely come in as a result. As such, the bulls are committed to further upside and green closes starting on Monday.

The SPX has now confirmed that the previous high daily and weekly close at 1343 is a major pivot point suggesting that a close below that level will signal that the recent uptrend has come to a stop and that a full-blown correction will be occurring. This is a positive for the bulls inasmuch as they now have a clearly defined stop loss point nearby they can depend on and buy against. By the same token, the bears also now have a level they can target where they can feel comfortable that a break of that level will bring in new selling.

The SPX did close near the highs of the week suggesting further upside is the most likely scenario this coming week. Nonetheless, with the Greek loan now being history, the reaction of the traders this week is still a bit of a mystery.

The indexes are giving mixed signals with the DOW leaning toward the downside, the NASDAQ leaning to the upside, and the SPX uncommitted. The driving force of the market during the past few weeks has been the resolution of the Greek Loan crisis and with that now being history the traders are in a quandary as to what the indexes will do now, especially since the important Jobs report that came out highly positive on Friday failed to take the indexes into new highs. Traders will be closing looking at what the indexes do on Monday for direction and likely will follow whatever lead is taken.

There are a slew of economic reports this coming week that have importance, though not great importance. Retail Sales will come out on Tuesday, the weekly Initial Claims, Manufacturing data, Philadelphia Fed and PPI on Thursday, and then Industrial Production, Capacity Utilization and CPI on Friday. None of these reports by themselves is likely to move the market very much but if they all come out better or worse than anticipated the combined aggregate will likely color trader's minds as to what to do.

This coming week is very pivotal inasmuch as failure to follow through on positive economic news as well as the resolution to the Greek loan crisis will be seen as a short-term negative, especially since the close on Friday in all the indexes suggest that further upside will be seen this coming week. By the same token, there are no more crisis resolutions to help the traders push the market up and therefore this is a week where it will be known just how much more upside the traders believe the indexes have left, based on the outlook of the economy for the rest of the year.