DOW Friday closing price - 14810

The DOW extended the recent short-term downtrend having generated the fourth red weekly close in a row, which is the first time it has been seen this year (last time was in Nov12). It should be mentioned that the index has only shown more than 4 red weekly closes in a row once in the past 10 years and that was back in May11 when the index generated 6 red weekly closes in a row that ended up signaling the beginning of a major correction of 2400 points that took over 5 months to complete. As such, the close next Friday could end up being a strong indicator of what will happen the rest of the year, especially since the most important economic reports for the month are due out this coming week.

The DOW closed in the bottom half of the week's trading range suggesting that further intra-week downside below last week's low at 14760 will be seen this week, perhaps even down to the intra-week low seen in June at 14551. Nonetheless, the probabilities do favor a rally and a green close at the end of the week as there are still no strong negative indicators suggesting that the uptrend is over and that a downtrend has begun. As it is, the bulls were able to generate a close on Friday 10 points above the low weekly close (14799) seen the same week that the 14551 was made, preventing a sell signal on the weekly chart from being given and suggesting that there is decent to strong support at that level, especially since the index rallied 57 points in the last 5 minutes of trading to generate that close.

On a weekly closing basis, minor resistance is found at 15248, minor to decent at 15354 and decent to perhaps strong at 15658. On a daily closing basis, very minor resistance is found at 14824, minor at 15010, minor to perhaps decent between 15248 and 15254 and minor to decent again at 15318. Above that level, there is decent resistance at 15409, minor at 15604 and decent to perhaps strong at 15658. On a weekly closing basis, support is decent at 14799. On a daily closing basis, support is minor at 14776, minor to perhaps decent and strong at 14659.

The DOW is facing a pivotal chart week inasmuch as a red close next Friday would not only be a strong sell signal on the weekly chart but would put the index in a category seen only once in the past 10 years, which in turn would likely mean that the traders have given up on the index making any new all-time highs the rest of the year.

To the upside, the DOW shows minor resistance at 14887, at 14916, and just a little bit stronger at 15049. Additional minor resistance is found at the 100-day MA, currently at 15135 and at the 50-day MA, currently at 15245. Minor to decent resistance is found at 15340 and decent resistance at 15542. Strong resistance is found at 15658. To the downside, the index shows minor support at 14760, decent support at 14551, and minor to perhaps decent support at the 200-day MA, currently at 14445.

The Syrian conflict is hanging over the DOW and is adding strength to the sell pressure that is being seen. Additional military action in the Middle East will likely prevent buying interest of consequence from appearing, meaning that there is an external factor affecting the index that could go away or increase overnight depending on the resolution, which in turn makes everything that happens this coming week be taken with a grain of salt.

On a chart basis alone, the DOW is likely to head lower this week with an intra-week objective of 14551 and a daily close objective of 14659 and then generate a rally toward the end of the week with a green weekly close anywhere between 14865 and 15030.

NASDAQ Friday closing price - 3589

The NASDAQ gave a small sell signal on the weekly chart on Friday, having closed below the most recent low weekly close at 3602. Nonetheless, the sell signal must be considered a minor one as the previous low weekly close that was broken was considered also a minor support, likely meaning that the traders are still not totally convinced that the index is heading much lower. This scenario is especially true since the gap between 3522 and 3552 still has not been closed or the minor to decent intra-week support at 3573 broken.

The NASDAQ did generate what might be considered an indicative negative reversal having gone above the previous week's high and below the previous week's low and then closing deep in the red and near the lows of the week, suggesting that further downside is likely to be seen this coming week with 3480-3500 as the possible downside objective to be seen. In addition, the week's high at 3684 will be considered the second successful retest of the 13-year high at 3694 if the index gets below last week's low at 3573.

On a weekly closing basis, there is minor resistance at 3657 and decent at 3689. On a daily closing basis, there is very minor resistance at 3611 and minor at 3620. Above that level, there is decent resistance at 3657, minor to decent at 3684 and decent to perhaps strong at 3692. On a weekly closing basis, support is very minor at 3587, minor at 3498 and decent at 3357. On a daily closing basis, support is minor to decent at 3578/3579, and minor at 3505. Below that level, there is minor support at 3459, decent support at 3400, and strong support at 3294.

The NASDAQ is now showing a top formation that has been built and retested successfully on both the daily and weekly charts and all that is left for the bears to do, if they have the power to do so, is to deliver the "killing blow" this coming week. With important economic news due out, as well as a possible resolution or intensification of the Syrian problem, the probabilities favor some short-to-midterm decision on the trend of the index being made by Friday. The charts do suggest the resolution will be to the downside but then again for the past 4 years the bulls have generally come out the winners on those occasions where a decision like this is faced.

The NASDAQ has a clearly defined level of support at 3573 which has been the low for the past 7 weeks and retested successfully on several occasions. On the weekly chart, below 3573 there is mostly a vacuum of support until 3294 is reached, meaning that the bulls have to defend this area with a vengeance or face the possibility of the index dropping a whopping 8% in value if the level of chart support is broken.

To the upside, the NASDAQ shows important resistance at last Monday's high at 3684. If 3684 is broken, the index will highly likely resume the uptrend and new 13-year highs made. By the same token, Thursday's high at 3635 has now taken an increased level of pivot point importance as that high is being seen as a failure of the bulls to close the gap between 3653 and 3629 that was generated on Monday. Failure to close that gap, especially if a second gap below 3573 is seen at some point this coming week, would be considered like a "nail in the coffin" of the bulls.

To the downside, the NASDAQ has a very pivotal level of support at 3573 that now includes the 50-day MA that has been moving up and will be at that price this coming week. Some very minor support is found at the gap area at 3552 but if the gap down to 3522 is closed, the probabilities would strongly favor a drop down to the 100-day MA, currently at 3480, which does include 2 previous intra-week highs of some importance at 3484 and 3488. A break of that support and the probabilities would then favor a drop down to the 200-day MA, currently at 3295.

It is evident that the NASDAQ is facing an important pivotal chart week due to the price levels being seen. The fact the index has been the leader to the upside recently does suggest that if the 3573 level of support is broken, the traders will key on this index for their selling interest, at least as far as profit taking is concerned.

It should be mentioned that the NASDAQ had a negative reversal month on the monthly chart, having made a new 13-year high and then closing in the red and on the lows of the month, suggesting that further downside, perhaps down to 3294, will be seen in September. It should be noted that since the major low at 1265 was made in March 2009, the index has shown only one monthly reversal (May11) and that reversal generated 4 additional red close months. In fact, if you go back to the major low seen on October 2002 at 1108, the index has had a total of 6 negative monthly reversals and in 67% of the cases the index generated at least 3 months of red thereafter, and in all cases the index did generate follow through to the downside in the month immediately therefore, suggesting a high probability that the index will get below 3573 this month.

The NASDAQ is once again likely to be the decisive index this coming week and with the ISM Index report coming out on Tuesday and some kind of resolution regarding the Syrian problem likely due out by then as well, Tuesday's action could spell out the action the rest of the month.

SPX Friday closing price - 1632

The SPX continued its recent downtrend with a classic negative reversal week (higher highs and a close below last week's low) that not only suggests further downside will be seen but that at least another 2% drop will occur as the index shows no support on the intra-week chart until 1600 is reached, meaning an additional 32 point drop could be seen this week.

The SPX has not only given a failure to follow through signal on the daily closing chart when it closed on August 15th below 1669 but has tested that resistance successfully with a close on Monday at 1663, followed by 4 daily closes below that level the rest of the week, as well as a new 7-week daily closing low on Thursday, meaning that the bulls have been unable to generate any kind of buying of consequence.

On a weekly closing basis, there is very minor resistance at 1663, minor to perhaps decent at 1667, minor at 1692 and decent at 1709. On a daily closing basis, there is very minor resistance at 1638, minor to perhaps decent resistance at 1663 and decent at 1669. Above that level there is minor resistance at 1685, minor to decent gain at 1697 and decent at 1709. On a weekly closing basis, support is very minor at 1630 and decent at 1592. On a daily closing basis, support is very minor at 1630, minor to decent between 1609 and 1612, and decent at 1573.

The SPX closed below the 100-day MA on Wednesday and retested the line successfully on Thursday, putting the index in a short-term negative outlook. It is likely that this break of the 100-day MA was due mostly to the Syrian problem and that the break will be negated if the problem ebbs. Nonetheless, a daily close below 1630 would be a strong confirmation of the breakage of the 100-day MA and would likely cause the index to drop and close down around the 1608-1612 level before any new buying interest would appear.

The SPX generated a second gap down on Tuesday from 1656 to 1652 that might end up becoming a breakaway/runaway gap formation if confirmed. The first gap is at 1684 to 1679. Gaps are very rare in the SPX so the probabilities of the gaps being closed is high, but if the index confirms this gap with a successful retest of the gap and/or a move below 1627 this coming week, the formation will probably gain trader respect and become a force to deal with.

To the upside, the SPX shows resistance at Thursday's high at 1646 as well as at the gap area at 1652. Further resistance is found at 1669 but with a rally up near that level meaning the gap at 1656 was closed, would suggest that resistance would get broken and a rally up to close the first gap at 1684 would occur. Intra-week resistance of consequence is found at 1687 and that level is unlikely to get broken at this time. To the downside, the SPX shows very minor but likely short-term indicative support at 1627. A break of that level would push the index to the next level of minor support at 1608 and likely down to the stronger intra-week support at 1598-1600.

The SPX has been mostly a follower and not a leader as of late and there is not much chance of that changing this week. Tuesday will be an important day with 1627 and 1652 having quite a bit of short-term importance. A break of either of those 2 levels is likely to bring about an additional 30 points move in the direction the levels are broken.

Probabilities favor the downside but with the economic reports due out and the volatile nature of the Syrian problem, probabilities are split almost evenly.

The bears had their way this past week as all indexes fell in spite of the fact they had closed on or near their highs of the week the previous week. The Syrian problem was likely one of the causes for the failure as the possibility of military action in the Middle East will bring about selling. Nonetheless, there has been a general lack of follow through in the bull camp as of late, suggesting that some consistent long-term profit taking is occurring, more emphatically shown by the clear and evident under-performance of the DOW over the past 4 weeks. The Syrian problem is a monkey wrench at this time but it was announced this weekend that President Obama will wait until Congress reconvenes next week before deciding whether to strike militarily or not, meaning that some of the immediate selling pressure based on Syria alone will be relieved this coming week as the decision is pushed back at least one more week.

The traders will have important economic data coming out this week in the way of the ISM Index on Tuesday and the Jobs Report on Friday. The few economic reports that came out last week were mostly better than expected, meaning that the economy continues to recover and that the Fed is likely to begin to curtail Stimulus. If the reports this week continue the recent trend of improving numbers, it will be difficult to evaluate which will take precedence in the minds of the traders, the better numbers (bullish) or the higher probability of Fed curtailment of Stimulus (bearish).

The charts suggest that the market is going to be in a trading range for the next couple of weeks with some small downside yet to be seen this coming week but a rally to be seen thereafter as the index continues to build what could end up being a bearish Head & Shoulders formation that would suggest a mid-term top has been found.