DOW Friday closing price - 12815

The DOW gave clear indications this past week that a top to the recent 5-month rally is now in place when the index closed below an important psychological support at 13000. Having now dropped 918 points over the past 5 weeks it is unlikely that a return to the uptrend can occur until the Fiscal Cliff is addressed and solved, and that won't happen before January at the very earliest. In addition, the re-election of Obama does take away some of the recent buying enthusiasm that was attached to the possibility of Romney winning.

The DOW had a strong spike down week closing near the lows of the week suggesting that further downside will be seen this coming week. The index did some short and mid-term damage by breaking and closing below both the 50-week (currently at 12880) and 200-day (currently at 12995) MA's meaning that the traders do not expect anything positive to happen until after the New Year and that the index is at least in a sideways trend if not a short-term downtrend.

On a weekly closing basis, resistance is minor at 13090 and decent between 13232 and 13276. On a daily closing basis, there is minor to decent resistance at 13005, decent resistance between 13232 and 13245, and decent to perhaps strong resistance between 13279 and 13328. On a weekly closing basis, support is decent at 12810 and then nothing until decent support again is found at 12118. Below that, there is minor support between 11858 and 11934. On a daily closing basis, support is minor to decent between 12715 and 12759. Below that, there is minor support at 12617, at 12573 and at 12502. Strong support is found at 12102.

The catalyst this past week was the re-election of Obama. The DOW promptly broke down the morning the results were announced with a drop of 369 points and 2 subsequent days of further downside where an additional 143 points were lost. The index did generate a small bounce on Friday from the lows of the day to close in the green and in the middle of the day's trading range suggesting that some chart buying was found near the 12700 support level.

On an additional positive note, the DOW was able to close slightly above the 12810 level on Friday, which is the previous high close for the year and an important weekly close level that if broken to the downside would give a failure to follow through signal of consequence. The close at 12815 likely means the traders want to see further economic news before making a decision. It also means that the close next Friday will likely determine what the index will do the rest of the year.

The DOW did close near the lows of the week on Friday and further downside is expected to be seen this coming week with a break below last week's low at 12743 to be seen. Nonetheless, the index does have decent intra-week support at 12734 and at 12710 as well as "general" support at 12700 (300 points below a major level) that is unlikely to get broken without further negative economic news. There are several economic reports due out this week of some consequence, starting with Retail Sales on Wednesday, that could push the index over the edge. Nonetheless, none of the reports are major or generally catalytic or likely to generate the kind of buying or selling needed to make a statement.

To the upside, the DOW will now find intra-week resistance at 12898 and at 12960. Nonetheless, the stronger resistance will be found between 12977 and 13055 where 4 previous highs or lows of some consequence are found. In addition, the 200-day MA, currently at 12995, will be considered a decent to strong resistance level on a daily closing basis, giving that area the look of a brick wall as long as there are no positive fundamental changes. Should the bulls be successful in establishing the index back above 13000, the index could rally as high as 13300 but the probabilities do not favor that scenario occurring.

The intra-day rally seen on Friday does suggest that the traders are trading the DOW technically using the decent support at 12700 as a base for their purchases. By the same token, the Obama re-election is likely to keep a good lid on the index until such a time that some compromise is seen between the Democrats and Republicans on those issues that have kept them apart for the past 4 years. That is not likely to be evident at this time. As such, the probabilities favor the index trading between 12700 and 13000 for the next few weeks until the next round of important economic reports come out. The bias, though, will be to the downside and any break and close below 12700 could generate a short-term downtrend with 12000 as the objective.

The DOW is likely to trade lower on Monday with 12700/12710 as the objective. The index did see a rally and green close on Friday but that was mostly due to the fact that the bulls knew they had to close the index at or above 12810 or a failure to follow through signal would be given that would generate further aggressive selling. The bulls were successful in that venture but the index is likely to see a lower low than last week this coming week and it is probable the traders will want to get that out of the way as soon as possible and establish that the 12700 level is a decent chart support, before they attempt to rally the index back up to 13000.

NASDAQ Friday closing price - 2904

The NASDAQ broke the mid-term trend convincingly this past week closing below the 200-day MA, currently at 2985, by 2.5%. The index closed near the lows of the week and further downside is expected to be seen this coming week with 2873 as the minimum objective. The break was further supported when the main stock in the index, AAPL, also closed below its 200-day MA as well as below the 50-week MA, suggesting that the mid-term uptrend in that stock has also come to a halt.

On a weekly closing basis, there is minor resistance at 2937 and minor to decent at 3000. On a daily closing basis, resistance is minor at 2930, at 2958, and at 29.65. Support is minor to decent between 2976 and 2985. On a weekly closing basis, support is minor to decent at 2873 and decent at 2747. On a daily closing basis, support is minor to decent at 2854 and decent at 2778. Strong support is found at 2747.

After the election results on Wednesday, the NASDAQ gapped down on the opening breaking the 200-day MA from the start of trading and subsequently following through with 2 additional days of selling that confirmed that the break of the MA is valid. The break of the 200-day MA, especially in this index that has been the leader for the last 4 years, suggests that the uptrend is now over and that the index is either trading sideways or in a short to mid-term downtrend. Nonetheless, the index was able to stay above last year's weekly high close at 2873 also suggesting that the long-term uptrend is still intact.

The NASDAQ did generate a green close on Friday after its star stock AAPL generated a bounce as well, but the index was unable to close at or above 2 minor but somewhat indicative daily and weekly closes at 2910 and 2908 respectively, in spite of the fact it was the strongest of all the indexes on that day. The close below those 2 levels does suggest that Friday's rally was unimportant and that further downside will be seen this coming.

Daily and weekly close support in the NASDAQ is found at 2873 but the reality is that the support is from previous high closes and not low closes and therefore considered minor to decent at best. On an intra-week basis, no support is found until 2839 and even then that support is at best minor suggesting that the index could drop down to the psychological support at 2800. Strong intra-week support is found at 2726 but a drop down to that level would likely generate a failure to follow through signal of consequence, likely putting the index into a downtrend and not a sideways trend. It must be mentioned that there is quite a bit of congestion as well as multiple intra-week support levels between 2774 and 2839 that are unlikely to all be broken without further negative news of consequence being released. By the same token, based on the spike drop seen this past week and the close near the lows of the week, as well as the fact that there is no previous intra-week support until 2839 is reached, I would say that a drop down to 2839, or very close to it, is likely to be seen this coming week.

To the upside, the NASDAQ will show minor intra-week resistance at 2930 and then decent to strong resistance between the 200-day MA, currently at 2985, and up to the 3000 level. It is unlikely that the index will be able to get above 3000 until positive fundamental changes occur.

AAPL continues to be the main catalyst affecting the NASDAQ and it should be noted that the stock does not show any intra-week support until 522.17 is reached. The stock closed at $545 on Friday which means than an additional 5% drop could be seen. Other important stocks in the index, such as AMZN and GOOG, are also in a short-term downtrend with objectives that are 4-5% lower as well, suggesting that an additional drop of 2% in the index (down to 2839) can easily be seen. It should be noted, though, that a drop down to that level will not necessarily mean that a failure to follow through signal would be given as it is the daily and weekly "closing" price at 2873 that is important.

The probabilities favor the NASDAQ dropping further this coming week with 2839-2850 as the intra-week objective. Nonetheless, the index should be successful in staying above the 2873 area on a closing basis, thus keeping the long-term trend intact until such a time that further economic news comes out.

SPX Friday closing price - 1379

The SPX gave a failure to follow through on Friday having closed below the high weekly close at 1408 that was made in March. The index closed near the lows of the week and further downside is likely to be seen this coming week with 1363/1370 as the downside objective. It should be noted that the SPX, like the other indexes, also broke the 200-day MA on Thursday, currently at 1381, but did not break it convincingly (closed at 1377) and did close in the green on Friday suggesting that Monday's close will be important as a close above 1381 will likely give the bulls some ammunition for further purchases up to the 1408 level, while a close below 1377 will generate new selling and a 1363 objective.

On a weekly closing basis, resistance is decent between 1403 and 1408. Above that level, resistance is strong between 1460 and 1465. On a daily closing basis, resistance is minor between 1387 and 1390, minor to decent between 1405 and 1408 and decent at 1418/1419. On a weekly closing basis, support is minor to decent at 1370 and again at 1363. Below that level, support is minor at 1316/1319, and decent to perhaps strong support is found at 1278. On a daily closing basis, support is minor at 1365, minor again at 1358, and minor to decent at 1343. Strong support is found at 1278.

The SPX has been outperforming the other indexes but likely because the financial industry did not rally as much during the last year as stocks in the other indexes did. As such, the selling in the SPX has been more subdued at this time. Nonetheless, the index seems to be heading down to last year's high weekly close at 1363, much like the DOW and NASDAQ are doing with 12810 and 2873 respectively, and if a close below 1363 occurs the index will give a second and more important failure signal that will likely put the index into a downtrend.

The SPX might be the index the traders watch this week mainly because the index barely broke the 200-day MA this past week and if able to negate the minor break it will likely give traders some chart incentive to buy. By the same token, and kind of a red close below 1377 on Monday will bring in new selling with 1363 as the objective for the weekly close.

Intra-week support in the SPX is found between 1354 and 1358. The index did have a double bottom at 1358 in April from which a rally up to 1415 occurred. In addition, the index showed a minor spike low on August 2nd at 1354 from which a rally up to 1426 occurred, suggesting that the traders will likely be buying the index between those 2 support levels. In addition, the 1363 level, on a daily and weekly closing basis, is important as it is the previous high close for 2011, which if broken would give a second failure to follow through signal of consequence.

Resistance in the SPX starts at 1402 and goes up copiously to 1426. Further resistance of consequence is found at 1433/1434. The 100-day MA is currently at 1402 and that is a line that has been relatively successful in the past in this index as resistance as well as support. A rally up to 1402 is likely to be seen but further upside, perhaps up to 1426, is likely to need help either from the other indexes or fundamentally.

The key for this coming week is the 200-day MA, currently at 1381. The 200-day MA is a line that traders respect as an indicator of mid-term trend. With the index closing on Friday only 2 points below that line it is evident that all eyes will be on what the SPX does the first couple of days of the week. The probabilities favor the index heading lower as the same line was convincingly broken in the other indexes and further downside is expected all around. Nonetheless, the SPX does represent the financial industry and that is an industry that at this time seems to be trading a bit on its own and therefore a good reason for the traders to pay attention to what the index does here.

It should also be mentioned that the SPX shows that the 50-week MA is currently at 1363 which is also a very important daily and weekly closing level. The weekly chart always takes precedence over the daily chart and more so because the other indexes have broken their 50-week MA, which in turn suggests the index should be "at least" testing that line before any longer term decisions are made.

The probabilities do favor the SPX heading down to 1363 this coming week but also favor the index getting into an intra-week trading range for the next few weeks between 1358 and 1402.

The re-election of Obama affected the market substantially this past week causing levels of support of importance to break. The re-election of Obama likely means more regulation, more taxes on the rich and less profits being made across the board, both individually as well as corporative-wise. In addition, there was a decent chance that Romney was going to win so some speculative buying had been seen prior to the election that was met with liquidation once the results were known. The market looked to be under strong selling pressure on Thursday as well as some early morning on Friday suggesting that further downside, perhaps a major break of support, would occur. Nonetheless, when the indexes got close to the chart support levels technical buying was seen and it was sufficient to cause the indexes to stop falling suggesting that the Obama re-election may not be as dire fundamentally as the market was showing it could be late in the week.

It is now probable that the recent 5-month uptrend is over, putting the indexes into either a downtrend or a sideways trend. The market had rallied under Obama way before Romney was a viable candidate so it is not likely that the re-election had a major negative effect. By the same token, the market is facing a major fundamental hurdle in the form of the Fiscal Cliff that will need to be addressed and solved by the beginning of the year likely meaning that no one is going to be a major buyer of stocks until that situation is resolved. By the same token, resolution of that problem will likely be met with aggressive enthusiasm and buying meaning that aggressive selling is not likely to be seen either. As such, the probabilities favor a sideways market during the next few weeks with possibly a "slight" downward bias.

Economic reports of "some" consequence are due out this week with Retail Sales heading the list. Nonetheless, none of the reports are likely to be catalytic meaning that it is unlikely to have a strong effect on the market overall. Technical and chart trading are likely to take precedence over everything as the economic calendar for this coming week does not support any major changes. As such, support levels are likely to be bought as well as resistance levels likely to be sold.