DOW Friday closing price - 12454

The DOW generated a green weekly close above the previous week's close at 12369 but did so in a half-hearted way as the buying dried up after Tuesday's strong rally. The news from Europe regarding Greece remains negative and the economic reports that came out this past week were generally as expected or worse than expected, giving no ammunition to the bulls to keep the rally going. The index made the high for the week on Tuesday but after that no new buying came in, suggesting that selling pressure remains strong.

The DOW seems to be in the process of building an bearish inverted flag formation on the daily chart with the flagpole being the drop from 13338 to 12311 and the flag being the trading range this past week between 12311 and 12575. A break below the bottom of the flag at 12311 will give an objective of 11547 which actually fits in well with a decent intra-week support from Mch11 at 11555. The 11555 level was a strong low that lasted 5 months before being broken in August of last year.

On a weekly closing basis, resistance is minor to decent at 12681, and decent between 12810 and 12849. On a daily closing basis, resistance is minor to perhaps decent at 12529 and decent between 12715 and 12724. On a weekly closing basis, support is decent between 11858 and 11934. Below that level, there is no support until decent support is reached at 11231. On a daily closing basis, support is minor at 12369 and minor to decent at 11897, and minor to decent again at 11766.

The DOW rallied this past week but the rally failed to reach any kind of resistance stopping at the 12575 level where no previous resistance of consequence is found. The failure to sustain a rally on a week where the bulls had a slight edge has to be disappointing and likely means that unless some good news comes out this week that resumption of the downtrend is likely to occur.

The 200-day and 50-week MA's, both currently at 12240, have to be considered a magnet with the DOW closing only 200 points above that level on Friday and disappointment being felt. If nothing fundamentally positive happens over the long weekend and the index fails to generate a rally on Tuesday, drops down to that line will be highly likely to be seen. By the same token, it does need to be mentioned that there is no previous intra-week support where the 200-day and 50-week MA's are currently located as the closest support below 12300 (general support) is not found until 11862 is reached. As such, if the index gains the kind of downside momentum that was seen 2 weeks ago, it could easily break the MA's lines and drop down to that level, putting the bulls totally on the defensive and hoping some positive resolution is found for the Greek problem.

It should also be mentioned that on the weekly chart the intra-week supports at 11862 and 11735 are considered minor to at best decent and likely to get broken if the index does break the MA's lines. The 100-week MA is currently at 11865, giving that support extra strength, but even though the 100-week MA is good support line when a trend is clearly established, it is not a good line when there are doubts about the trend and also when a high of consequence is found. Under those conditions, the line has been broken rather easily in the past. If the 11862 area of support does not hold up, the index will likely get down to 11555 which is a decent intra-week support that does stand out on the chart.

To the upside, the DOW continues to show a good possibility of testing the breakdown area up at 12750 (12720 on a closing basis). The index failed this past week to get there and that does decrease the probabilities of getting there, but it does not negate them especially since the index did generate a green weekly close on Friday. Nonetheless, the 12575 high has gained some strength as the index tested that level successfully on 2 occasions this past week with rallies up to 12539 and 12531. Nonetheless, if there is any positive news after the weekend, the bulls will re-attempt to break above that level and should not have many problems as it is not an area that has "established" strong resistance. A break above 12575 should stimulate enough buying to take the index up to the 12750 level where resistance is strong.

It is evident that much will be decided for the week on Tuesday. The markets are open in Europe on Monday and any news that is likely to affect the market over the weekend will likely be known by then. As such, the probabilities are high that when the U.S. market opens on Tuesday that some decisions will already have been made, likely giving the traders a direction to take the rest of the week.

NASDAQ Friday closing price - 2837

The NASDAQ confirmed the failure to follow through signal given the previous week with a second close in a row below last year's high weekly close at 2873. The index had the opportunity to negate the break as the index did not go below the previous week's low and generated a strong rally from the lows of the week on Tuesday suggesting that the bulls would be able to get above the 2873 level with little problem. Nonetheless, the bulls came up a bit short when the index only rallied up to 2867 on Tuesday and then was totally unable to generate any new buying the rest of the week.

The NASDAQ did generate a green weekly close on Friday, as well as a close in the upper half of the week's trading range, suggesting that the probabilities do favor a new attempt this coming week to get and close above the 2873 level. Nonetheless, the bulls must now depend on some positive fundamental news this weekend to keep the door open for additional buying to come in this week, especially since the index ended up having an inside week and those generally get resolved in the direction of the short-term trend, which is down.

On a weekly closing basis, minor to decent resistance is found at 2833 and at 2858 and decent resistance is found at 2873. On a daily closing basis, minor resistance is found at 2850, minor to decent resistance is found at 2858 and decent at 2873. On a weekly closing basis, support is minor at 2778 and again at 2737, minor to decent at 2643 and decent at 2616. On a daily closing basis, support is minor at 2778 and again at 2762 and then nothing of consequence until decent support is found at 2616.

The NASDAQ seems to be in the process of building a bearish inverted flag formation on the daily chart but the formation does not yet seem to be formed totally, meaning that further sideways trading is likely to be seen. By the same token, the index does have some room to the upside, within that bearish formation, and the probabilities continue to favor the index trading up to at least the 2873 level at some point this coming week. With the index having traded around the 2850 level for the past 5 days and the high for the week having been 2867, a rally up to the 2873 level would not take much buying to accomplish. In addition, having closed in the upper half of the week's trading range suggests that last week's high will be broken and 2873 is a very viable and achievable objective.

To the downside, the NASDAQ shows support at 2795 and at 2774. The 2774 level has to be considered the bottom of the inverted flag and if broken would offer at 2550 objective. Other than the MA's lines at 2755 (200-day) and at 2743 (50-week) there is no previous established support until 2600 is reached. As such, if those MA lines are broken on a closing basis, the index is likely to take a big fall in a short period of time.

For this coming week, the chart suggests the NASDAQ will trade sideways to slightly up with a possible trading range of 2795 to 2888.

SPX Friday closing price - 1317

In conjunction with the other indexes, the SPX also generated a bounce off of the previous week's low. Nonetheless, the bounce was considered minor and uneventful inasmuch as the index was unable to get up to any kind of previous resistance level even though the index traded mostly in the green all week. The closest resistance of consequence is up at 1343 and yet the high for the week was 1328.

The SPX did close in the upper half of the week's trading range and further upside is likely to be seen this week. On a negative note, though, the index seems to be building an inverted flag formation on the daily chart with the flagpole being the drop from 1415 to 1291 and the flag being the trading range during the week between 1291 and 1328. A break below 1291 would offer a 1200 downside objective.

On a weekly closing basis, resistance is decent at 1343/1345 and decent to strong between 1363 and 1370. On a daily closing basis, resistance is very minor at 1320 and at 1326 and decent between 1343 and 1345. On a weekly closing basis, support is minor at 1295 and minor to perhaps decent at 1285/1288, minor at 1279, and minor to decent again at 1268. Below that level, there is no previous low close support until 1158. On a daily closing basis, support is minor at 1295 and minor to decent at 1265/1268 and then nothing decent support is found around 1200.

The SPX seems to be in a trading range right now with no clear short-term (1-week) direction. Rallies up to 1343 and drops down to 1295 can be seen within this trading range. Having closed at 1317 on Friday, the index seems to be right in the middle of the trading range awaiting news from Europe.

By the same token, the chart does suggest that any rally in the index, if seen, will be small and short-lived and that further downside is likely. The 200-day MA is currently at 1282 and the probabilities of that line being seen are very high. Nonetheless, the closest intra-week support seen, other than last week's 1291, is 1249/1258 and even then that support is almost 1 year old and not likely to hold up if the inverted flag formation proves to be correct. The stronger support is found at the 1200 level and any additional fundamental problems out of Europe are likely to push the index down to that level over the next few weeks.

The probabilities favor the SPX having another week of sideways trading with a very slight upward bias, followed by new weakness seen as the election in Greece on June 17th is due to occur.

The indexes were able to "stop the bleeding" this past week as they all generated a minor rally. The key word is "minor" as the buying was not sufficient to take the indexes up to the resistance levels above, suggesting that it was more profit taking and getting rid of the oversold condition than it was about anything else. Traders continue to worry about the European debt problems which don't seem to have an imminent solution or any good solution for that matter and until that gets resolved strong buying is not likely to be seen. In addition, economic reports continue to deteriorate and those too are likely to keep the selling pressure on.

Important economic reports are due out this week with the ISM Index and Jobs Reports both due out on Friday. Other reports, such as Consumer Confidence and the second GDP estimate are also due out this coming week, suggesting the traders will wait for those reports to come out before doing anything of consequence. Trading this coming week, at least until the reports come out, is likely to be sideways with perhaps a slight short-term upward bias toward the resistance levels mentioned above, unless of course something of consequence comes out of Europe regarding the debt problems.

UPDATE: Greek elections are now favoring the "stay in the Euro" group and the indexes traded higher on Monday off of that piece of news, with the DOW up about 100 points.