DOW Friday closing price - 13232

The DOW had an explosive week breaking above the Apr08 high at 13132, which was considered an important resistance level as it was the first major bounce up after the index began to collapse in 2007. The breakout is therefore regarded as a signal that the recession, and problems associated with the financial collapse, are now totally over. The chart implications of such a break are clearly defined suggesting that at the very least the all-time high at 14198 is likely to be tested this year if no fundamental impediments emerge, such as a new debt or default crisis in Europe.

The chart outlook for the DOW has now changed as this is no longer a "long-term" downtrend but either a sideways or bull market with 14198 likely being the deciding factor on which one it is. Fundamentally, it cannot yet be said that a bull market has started as unemployment is still high and the economy is not growing at the pace it was growing back in 2007. Nonetheless, there is no doubt that the problems associated with the last recession have now been erased, at least up to the point where fears of a market collapse have evaporated, to be replaced with hope that things will continue to get better.

On a weekly closing basis, resistance is minor at 13695, minor to decent at 13907 and major at 14093. On a daily closing basis, there is no resistance shown in the past 12 months. On a weekly closing basis, support is minor at 12980 and at 12922 and decent at 12801. On a daily closing basis, support is minor at 13005 and decent at 12759.

The chart outlook in the DOW did change this past week and the traders are now likely looking at a sideways trend to be in place. The outside parameters of a sideways trend are from 11634 to 14198 with the inside parameters of the sideways trend being 12517 to 13780. The outside parameters are likely to be seen if there are some decent catalysts seen, while the inside parameters are likely to be seen with simply normal trading. Those are now the parameters expected to be seen the rest of the year unless some unforeseen events happen.

On a shorter term basis, the DOW is likely to continue moving up as there are no economic reports of consequence or pending world announcements scheduled for this week. The next level of weekly close resistance is at 13625 and reaching that level within the next couple of weeks is a high probability. The index did generate a spike-type up week this past week and a close near the highs of the day suggesting follow through of the same ilk will be seen. Having had a 313 point trading range it would not be surprising to see a trading range this coming week of 250-300 points. With the index having closed at 13232, it can be surmised that a rally up to the general mid-point resistance at 13500 could be seen, with the rest of the rally up to the 13625 level coming the week after.

To the downside, the DOW will find some minor support at Wednesday's low of 13166. Though there is no previous support at that level it is the low seen the day after the spike and those lows often hold if the spike rally was "real". The index could get down as low as the high seen in Apr08 at 13132 if pushed, but not likely more to the downside will be seen this coming week, if that much.

The DOW did generate a reversal day on Friday having made a new 51-month high but closing in the red, suggesting the first course of action on Monday will be the downside. Nonetheless, all dips have been bought and with no negative news likely to come out this week it is likely the traders will continue to buy dips especially if the index gets down to the 13132-13166 level. By the same token, the momentum to the upside is strong and the 100 10-minute MA has not been broken for the past 7 days and that line is presently at 13224. Friday's low was 13231 and that low should be broken simply because a reversal day was seen on Friday. As such, there is a decent possibility that the trading range for Monday will be something like 13224 to 13281, which would keep the momentum going, fulfill the reversal day on Friday, and keep the chart set for higher prices.

There seems to be no reason for the DOW not to follow through again to the upside for this coming week.

NASDAQ Friday closing price - 3055

The NASDAQ blew past the 3000 level with a vengeance this past week as well as above the previous intra-week low seen in 2000 at 3042, suggesting that the weekly closing low that year at 3204 is the objective of this move. The index closed on the highs of the week suggesting further upside will be seen this coming week.

The NASDAQ has the ability to go higher as 3 of its main stocks have chart patterns and fundamentals that suggest higher prices. AAPL was highly touted this week and given a $700 objective (closed on Friday at $585), GOOG seems to be on the verge of a breakout as well with at least $670 as the goal (closed at $625 on Friday), and NFLX held an important support this week and closed near the highs of the week and has a potential upside objective of $160 (closed at $110) on Friday. With such upside potential among those 3 star stocks the index could easily head substantially higher before encountering new selling or profit taking.

On a weekly closing basis, the only resistance found near-by is the low weekly close from the year 2000 at 3204. On a daily closing basis, there is no resistance found above over the past 12 months. On a weekly closing basis, support is minor to decent at the previous weekly closing high at 2873. On a daily closing basis, support is minor at the recent breakout high at 2988 and decent at 2910.

The NASDAQ is now rolling and having gotten above a major psychological resistance at 3000 it is likely to keep heading higher as the traders can now use the demilitarized zone 2970-3030 as a support base to buy against. In addition, the stock has 2 daily closing highs at 2988 as well as a very minor daily closing low at 2983, giving the bottom of the demilitarized zone additional strength., With that kind of support it is likely that new buying will be seen around these levels.

To the upside, the NASDAQ shows no intra-week resistance until the 3535 level is reached, though on a weekly closing basis the 3204 level should prove to be difficult to break. It should be noted, though, that in 1999, at the height of the dot.com era, the index rose from a 2632 to 4192 in a period of only 11 weeks with no pause along the way. It is difficult to compare the index market now to the dot.com era but there is one stock that is giving the same kind of vibes now that were seen in 1999 and that stock is AAPL. It is impossible to compare the 2 eras but the reality is that the index is once again leading the show, much like it did in 1999, and that will give traders a lot of confidence in buying here.

To the downside, the 3000 level in the NASDAQ will now act as support. Prior to last week the index still did not show any close by support, other than down at 2600, that the traders could depend on. That has now changed as the 2970-3000 level can be considered decent support now that it has been broken so convincingly.

SPX Friday closing price - 1403

The SPX was able to shake loose of the shackles that have been causing the index to lag behind the other indexes when the banks passed the new stress tests this past week as well as announced an increase in dividends as well as stock buybacks. The latter caught the market by surprise and a rash of buying came in taking the index convincingly above the 1370 level that had acted as good resistance for 45 months as well as above a strong psychological resistance level at 1400. The index closed on the highs of the week and further upside is expected to be seen this coming week.

The SPX has not yet broken the same resistances that were broken in the DOW this past week and in the NASDAQ a couple of weeks ago. Nonetheless, the news was positively embraced by the traders and the action suggests the index could soon follow the steps the other indexes have followed.

On a weekly closing basis, resistance is minor at 1413 and minor to decent at 1425. Above that level, there is minor resistance at 1455, minor to decent at 1504 and strong resistance between 1552 and 1561. On a daily closing basis, there is no resistance found in the last 12 months. On a weekly closing basis, support is minor at 1386/1387, minor again at 1325 and decent to perhaps strong at 1268. On a daily closing basis, support is very minor at 1394, minor to decent at 1363 and decent to perhaps strong at 1343.

The SPX has lagged behind convincingly for the past few years due to the overwhelming problems the financial industry has found itself in for the past 4 years. Many financials stocks have languished at low prices and low PE's, even during the rally in the overall market. With one major problem settled recently, in the form of the Greek debt, and the continued low interest rate scenario that has been in effect and has been stated will continue to be in effect through 2014, the financial industry seems to be getting into a renaissance period that could make many financial stocks rally substantially over the next few months, perhaps even above the overall market.

As far as the charts are concerned, the SPX does show some resistance above. On an intra-week basis, the next resistance level is found at 1440, which was the first-bounce high seen in May08, the same level in the DOW that got broken this past week at 13132. There is no reason at this moment, since the index was able to close above 1400 on Friday, to think that level won't be at least tested in the next week or two. By the same token, there are few reasons now to believe that level will be broken as it is considered to be a minor to decent resistance at best and not likely to hold the index back if no negative news comes out.

Breaking above the 1440 level will put the SPX on a collision course with the 1500-1550 area that has proven to be such a major resistance level over the past 12 years.

To the downside, the SPX will now show strong support at the 1363/1370 level as well as minor support between 1394 and 1400. Having a close by support, the bulls are now likely to be more aggressive buyers, especially since the news has finally turned positive in the industry. Previous to this breakout, the closest support of consequence was down at 1158 and such a faraway support was not conducive to aggressive buying. That has now changed suggesting that there will be more buying now in the index than had been seen up to now.

The SPX did show decent weekly close resistance at 1400. Nonetheless, that level was broken on Friday suggesting that further upside, at least up to the 1440 level will be seen over the next week or two.

The indexes finally got together to give a united strong signal that further upside will be seen. Of course, that still all depends on Europe and China not coming up with some new crisis, but barring that kind of an event the indexes, both fundamentally and chart-wise, are saying further upside is the most likely scenario. In addition, there is nothing scheduled to stop the indexes from going higher this coming week as there are no economic reports due out that could be used as a negative catalyst. The indexes are overbought and there are still plenty of traders believing that a correction is likely to be seen soon. Nonetheless, the indexes are now past the time frame that is normally seen for the seasonal correction to begin and 2006, the exception to the rule, seems to be suggesting that a second exception to the rule is occurring.

All the pitfalls that have been talked about over the past few months are still in the periphery of the market and could rear their ugly faces at any time. By the same token, the market has gathered the kind of momentum, both fundamentally and chart-wise, that is hard to stop without a big slap in the face and right now there doesn't seem to be anything looming immediately on the horizon that could deliver such a blow, especially with the Greek problem now resolved for the short-term.

In addition, what happened this past week was a clear sign that the market has shed the mantle of long-term downtrend and that the next decision to be made is whether a bull market is on again or simply in a phase of trading sideways awaiting further developments in the economy this coming year. The latter is the most probable as there are a lot of fundamental reasons that suggest that the economy in the U.S., or even in other countries, will not be growing at a pace this year to support a bull market. Nonetheless, it always has to be kept in mind that the indexes are generally anticipating what will happen 9-12 months down the line and therefore it is not possible to say with certainty that the economy won't begin to grow a year from now as it was growing back in 2007. The probabilities, though, favor a sideways trading market for the rest of the year with some upside and some downside yet to be seen.