DOW Friday closing price - 15376

The DOW generated the strongest rally/trading range since the last week of June (12 weeks ago) when the index made the 14551 low and had a reversal trading range of 525 points that has become the stalwart price support and rally range for the bulls this year since it ended up generating an additional 582 point rally in the subsequent 5 weeks and a new all-time high. The trading range for last week was 453 points and it is likely to be extended this week as the index closed on the highs of the week and the question this week is "will the bulls be able to continue to generate the kind of buying seen previously and make new all-time highs off of it?"

The DOW outperformed the other indexes this past week and that probably needs to be considered a general positive for the traders as the last 4 weeks the opposite occurred when the market was under selling pressure. Changes in the buying patterns are often indicative of something important ready to occur, but then again it is not all that clear yet whether it means the index has reversed and is going higher or ready to begin a longer term downtrend.

On a weekly closing basis, decent to perhaps strong resistance is found at 15658. Above that level there is no resistance until the psychological resistance is reached at 16000. On a daily closing basis, decent resistance is found at 15409, minor at 15604 and decent to perhaps strong at 15658. On a weekly closing basis, support is very minor at 15115 and decent to perhaps strong at 14799/14810. On a daily closing basis, minor but perhaps indicative support is found between 15294 and 15300. Below that, minor support is found at 15115, minor to decent support at 14960, decent support at 14776 and decent to strong support at 14659.

The DOW is facing a very pivotal week inasmuch both the bears and the bulls need to defend these levels to accomplish their objectives. The bulls cannot afford to let the momentum to the upside ebb as there have been no strongly positive fundamental changes that would support new higher prices. The bears need to defend this area in order to build a bearish Head & Shoulders formation needed to generate new chart selling interest and hopefully break the impasse that has been in existence for the past 3 months. The good news is that the traders are likely to get the kind of information they need this week to help them make that decision as Wednesday's FOMC meeting could clarify what the Fed is likely to be doing from now on with the Stimulus program, and that has been the key issue for the last 3 months.

To the upside, the DOW shows that decent intra-week resistance is found between 15521 and 15542 (15409 on a daily closing basis) and decent to strong resistance at 15658 (both intra-week and daily close). To the downside, there is minor support at 15180 (previous minor intra-week low as well as where the 100-day MA is currently at) and then nothing until minor to decent intra-week support is found at 14844 (15000 demilitarized zone on a daily closing basis).

The rally in the DOW this past week was not surprising as there was no previous resistance built above 15083 until the 15300 was reached and therefore the buying was probably more chart oriented that news oriented. Certainly the ebbing of tensions in Syria was supportive as some of the previous selling was credited to the possibility of a military strike. By the same token, neither of those reasons will have much positive impact this week, meaning the bulls need more positive news to bring in new buying at these levels.

The DOW will likely go higher at the beginning of this week as there are no scheduled economic reports of consequence due out until Wednesday and no intra-week resistance found until 15542 is reached. In fact, based on the positive weekly close on Friday (above the left shoulder at 15354) it would be a negative if the index doesn't get up intra-day to at least the 15500 level. By the same token, on a daily closing basis there is decent to strong resistance between 15409 and 15425, meaning that closing-wise the bulls most of the upside is over unless the Fed surprises positively on Wednesday.

The probabilities suggest the DOW will show some minor follow through strength at the beginning of the week and selling at the end of the week.

NASDAQ Friday closing price - 3722

The NASDAQ made a new 13-year high this past week and closed near the highs of the week, suggesting that the uptrend has resumed and that another leg up will be seen. The index has no resistance above until 3860 is reached (140 points higher) and even then that resistance is old and considered minor to at best decent, meaning that if the bulls can continue to generate additional buying like what was seen this past week in NFLX, that the bears will have a very difficult time preventing that level from being seen.

The NASDAQ surprisingly under-performed the other indexes this past week as it has been the leader to the upside for most of the year. Then again, the likely cause of the under-performance can be credited to AAPL alone as the stock is 13% of the value of the index and it dropped $34 in price off of a disappointing unveiling of the new I-Phone 5. As such, it cannot be said that the index was targeted for selling this past week.

On a weekly closing basis, there is no resistance found until old resistance (year 2000) is found at 3860. On a daily closing basis, there is very minor resistance at 3729. On a weekly closing basis, support is very minor at 3689 and decent at 3589. On a daily closing basis, support is minor at 3692, very minor at 3654, minor at 3600 and decent at 3578/3579.

The NASDAQ has been on a tear since November of last year having rallied 920 points and generating a 33% increase in price. Four of the 5 main stocks in the index (AMZN, NFLX, GOOG, and PCLN) have made convincing new all-time highs this year and no strong signs have yet been given that further upside will not be seen.

The NASDAQ broke out of a bullish flag formation this past week (flagpole was the rally from 3294 to 3689 and the flag the 3689-3573 trading range seen the past 6 weeks) that offers a 3968 objective to be reached in an 8-12-week period of time. Nonetheless, if the index goes below last week's low at 3673, the flag will be negated and a failure to follow through signal given. Such a scenario does put the bulls in a "must rally" mode or face a possible bust outcome, meaning this week is pivotal and likely indicative of what the index will do the rest of the year. It should be said as well that in looking at the charts of the stocks mentioned above, every single stock except NFLX has a chart pattern that is also pivotal this week, meaning that right across the board everything is likely riding on what is said by the Fed on Wednesday.

Probabilities in the NASDAQ favor the upside.

SPX Friday closing price - 1688

The SPX had a strong week closing convincingly above the possible left shoulder of an H&S formation at 1669, suggesting that a resumption of the uptrend is more likely to be seen than a top formation being built. The index closed on the highs of the week and only 21 points from the all-time high at 1709, meaning that if the index duplicates this week what was seen last week (a 33 point higher weekly close) that a new all-time high will be made.

The SPX closed on the highs of the week and further upside is likely to be seen this coming week but the index closed in a congestion area between 1676 and 1699 that will not be easy to get above without some additional fundamental help. The index spent a total of 15 days in this trading range back in late July and early August and the strong momentum seen then was only able to generate 3 days above that area (up to 1709) before strong selling was seen. The momentum now is not as strong as it was then, likely meaning the bulls need the Fed to help them through.

On a weekly closing basis, there is minor resistance at 1692 and decent at 1709. On a daily closing basis, there is minor to decent resistance at 1697 and decent at 1709. On a weekly closing basis, support is minor at 1667, minor to decent at 1632 and decent at 1592. On a daily closing basis, support is minor at 1667, minor at 1650, minor again at 1642 and decent at 1630.

The SPX seems to be the intermediary between the DOW (slightly bearish) and the NASDAQ (slightly bullish) as the index is trading in a small but indicative 30 point trading range between 1669 and 1699 in which whatever side is broken will likely bring about follow through of consequence. Because the index could be the first to give a a clear chart signal, it is likely the traders will be keying on the index.

The SPX, like the DOW, is showing a possible Head & Shoulders formation but the formation lost some strength when the index closed convincingly above 1669 this past week. A close above 1695 will negate the possible formation and likely increase the probabilities of the uptrend resuming.

The SPX is not likely to do much at the beginning of the week as the traders will probably wait until after Wednesday's FOMC meeting to decide what to do. The probabilities strongly favor small trading ranges of less than 10 points the first 2 days of the week.

The Syrian problem seems to have been resolved positively and no longer likely to help the bears put sell pressure on the market. Nonetheless, the market was under sell pressure before the Middle East problem arose as traders were anticipating that the Fed would start to taper its Stimulus program. It was stated by a guest analyst on Bloomberg TV on Friday that it is likely the traders are already factoring in a 20% stimulus reduction, meaning that any less would probably help the bulls and more than that would help the bears. What will happen if exactly that kind of reduction is announced is difficult to ascertain at this time.

Everything this week is likely to revolve around the FOMC announcement on Wednesday so the traders are not likely to do much before that even though manufacturing and housing numbers are due out before then. Nonetheless, make no mistake about it, this coming week is likely to be pivotal and a deciding factor for the rest of the year.