DOW Friday closing price - 14397

The DOW made a new all-time intra-week and weekly closing high this past week on the tails of the Fed comments the previous week that low interest rates and stimulus will continue until unemployment is below 6%. The support from the Fed has been an open stamp of approval for the bulls to buy without fear of big corrections in the market as "big daddy" can be counted on to step in to stop any weakness of consequence. In addition, the continued low Bond rates have driven investors to buy stocks as yields on Bonds are presently a losing proposition at these low yield prices. This situation is expected to continue well into 2014.

The DOW decisively made new all-time highs by 215 points above the previous intra-week high and did close near the highs of the week suggesting further upside will be seen. With no resistance above and no catalytic economic reports due out this coming week, the probabilities favor the bulls continuing to have their way until something negative happens or traders decide to take profits.

On a daily and weekly closing basis, there is no resistance above. On a weekly closing basis, support is minor at 14093 and again at 14000. Below that, there is no support until minor support is found at 129398. Decent to strong support is now found at 12588. On a daily closing basis, support is minor between 13970 and 14030, minor to decent between 13860/13880 and decent at 13784.

The DOW has no resistance above but is strongly overbought on the weekly chart (RSI at 85) and is now overbought as well on the daily chart (RSI at 69), suggesting that a pause or a pull-back is likely to be seen soon. As far as the charts are concerned, it should be mentioned that the index rallied 358 points from the previous high at 13661 up to 14019 before a pause or a minor pullback occurred. The index did get up to 14081 before a 297 point correction occurred but the index then went into a 5 week-period of time in which it traded sideways while the overbought condition was resolved on the daily chart. Using the previous rally it can be predicted that the index will get up to at least 14439 (358 points from the previous high) and perhaps as high as 14500 (420 points from the previous high) if the 14081 level is used, before some profit taking or pause occurs.

To the downside, the DOW has no support whatsoever until the 14000 level is reached. Even then the supports are mostly from previous highs and therefore considered minor support. As such, should the index run into some selling or the traders decide to take profits, the index could drop as much as 300 points in the "blink of an eye".

The DOW has now generated 6 days in a row of green closes and that was the same amount of green close days seen on the previous rally that started on January 17th before a red day occurred. It should also be mentioned that there was one other occasion this past year where that same situation occurred and it was exactly 1 year ago and on that occasion the index generated a red close on the 7th day and followed that up with a correction of 287 points before new buying appeared. As such, the probabilities favor a red close on Monday and perhaps the beginning of a small correction to last the rest of the week.

The DOW is likely to mimic what the other indexes do this week and it should be mentioned that the SPX has resistance at 1555 and Friday's high was 1552, and the NASDAQ has channel resistance at 3260 and the index had a high of 3248 on Friday. As such, the probabilities favor the indexes all going slightly above Friday's high on Monday but then finding some chart selling resistance and the beginning of a mini correction.

On a positive note for the bulls, it does need to be mentioned that the DOW has no resistance above and the bears are totally on the defensive waiting for "something" negative to happen to step up and sell, as such, the probabilities of the index finding selling of consequence between 14449 and 15000 is speculative and undependable.

NASDAQ Friday closing price - 3244

The NASDAQ made a new 13-year weekly closing high this past week and closed above the previous low weekly close of consequence from the year 2000 at 3205. Previous low weekly closes, especially from 13-years ago, have to be considered minor so the higher close was not a major surprise, but it does suggest that further upside (perhaps of consequence) could be seen as there is no previous intra-week resistance found until the 3480/3500 level is reached.

The NASDAQ does show an up-trending channel using the 2 previous intra-week highs seen in March and September at 3134 and 3195 that connects to a 3260 high on this rally. A 2 point channel is not as dependable as a 3 point channel but with the fact that that the index shows a perfect lower parallel channel line using the previous 2 lows of consequence seen in June and November at 2726 and at 2810, it does give more credence that the 3250/3260 area could stop the present rally.

On a weekly closing basis, there no resistance until minor resistance is found at 3451 and at 3483. On a daily closing basis, there is no resistance for the past 12 months. On a weekly closing basis, support is minor 3183/3193 and minor again at 3163. Below that, resistance is minor to decent at 3000 and decent at 2960. On a daily closing basis, support is minor between 3183 and 3200. Below that, support is minor to decent at 3131 and decent to strong at 3116.

The NASDAQ outperformed the rest of the indexes this past week having gone up 2.6% where the other indexes went up 2.2%. The over-performance could continue to be seen as AAPL is showing signs of bottoming out and generating at least a short covering rally and a couple of other important stocks, such as AMZN and PCLN, still show room on the charts for further upside before reaching levels where selling can be expected. In addition, if the breakout in the DOW is to be believed, the index should once again take the leadership role as the Blue Chip stocks seem to be reaching levels where proper historical valuations are fulfilled (PE ratios presently at 15-1 and historical at 16-1).

It should also be mentioned that the NASDAQ is not yet overbought as the RSI on the weekly chart is at 61 and on the daily chart at 65. The index has seen overbought RSI numbers in the past as high as 95 and it not considered overbought until 75 is reached, meaning that on that front the index could still go higher.

To the downside, the NASDAQ has shown that the 3200 level now has to be considered an important pivot point support. The index shows a gap between 3182 and 3200 that should not be closed unless the stock has found a short to mid-term top. In addition, the index has 2 previous highs of importance seen in September at 3195 and 3196 that should not be broken unless a failure to follow through signal is given. Below that level, there is no support until the 50-day MA, currently at 3145 is reached. Strong intra-week support is found at 3105.

The NASDAQ is now the important index to watch this coming week due to the fact that no resistance is found above for another 250 points and the index does have a failure point close by at 3195/3200. A drop and close 50 points lower will give traders good chart reasons to turn into short-term sellers. By the same token, a rally and close above the top of the channel at 3260 will give the traders additional reasons to buy at these prices. With a clear trading range of only 60-70 points, it will be the index the traders watch.

SPX Friday closing price - 1551

The SPX closed on Friday just below the second highest weekly close ever (seen in Jul07) at 1552 and 10 points below the all-time high weekly close at 1561. The index closed above the weekly closing highs seen in 2000 suggesting that those levels of resistance are no longer important and that the traders will now be keying on the most recent highs seen 6 years ago in 2007.

The SPX has to be considered the most important index this coming week because of the fact it is the only index where previous resistance levels exist that will give traders a way to evaluate the strength of this present day market. In addition, it is the index that keys on the financial industry that caused all the problems during the last recession and if new highs are made would likely mean things are now "better" than they were before.

On a weekly closing basis, resistance is decent at 1552 and major at 1561. On a daily closing basis, no resistance above is found for the last 12 months. On a weekly closing basis, support is minor at 1515, and minor to perhaps decent between 1500 and 1503. Below that, resistance is decent at 1440 and decent to perhaps strong at 1402. On a daily closing basis, support is very minor at 1530 and minor to perhaps decent between 1495 and 15.02. Decent support is found at 1487.

The SPX is now facing the all-time high weekly closes made in 2007 at 1552 and 1561. Though the DOW has made new all-time highs and the NASDAQ made new 13-year highs, it should be much harder for the SPX to make new all-time highs for the simple reason that fundamentally the financial industry now has regulations that restrict the kind of avenues of profit that were available before and that is a "fundamental" impediment that will be difficult to overcome. It is an obstacle that the other indexes do not have.

To the upside, the SPX has intra-week resistance of consequence at 1553/1555 and then again at 1576. The 1553 level was the high seen in the year 2000 and the 1555 level was seen in Jul07. The 1576 level was seen in Oct07. The index stopped at 1552 on Friday and though it did not back off from that level it did reach 1551 early in the day and was not able to get above that level until the end of the day and then only by 1 point. It is likely the bears will be defending that level, especially since it is a level that has a 12 year history of resistance, having been seen in 2000 and in 2007. If 1555 gets broken, the traders will most likely test the 1576 level seen in 2007 and with the other indexes being able to get above their own comparable levels, the SPX would likely do the same. This means that the 1555 level will likely be a major battleground this week that will need some additional positive news to break.

To the downside, the SPX is at risk inasmuch as there is no support until the 1500 level is reached, likely meaning that if the selling becomes enough to stop the rally and the bulls start taking profits the index could drop 50 points in a fast manner. Stronger support is found at 1485 but below that there is no support until the 1400 level is reached.

The bulls need to keep the rally in the SPX moving further and above 1576 in order to prevent some serious profit taking should the index stall. A new all-time high would be an accomplishment that would likely bring in strong buying on dips but a failure here now might not be seen in the same light as it would be the third time that the index fails at these levels.

The rally in the indexes has taken on the look of a runaway freight train that is unlikely to stop until the fuel runs out (Fed stops stimulus and low interest rates) or the train crashes (bubble bursts due to an unforeseen catalyst). Corrections are likely to be seen at some point but finding what point is a guessing game. Simply stated, with the indexes having accomplished new highs the bears now have almost an impossible task of finding a level where efforts to sell can be concentrated to the point of possibly having some success.

The most important economic reports for the month came out last week and they both showed improvement and were supportive of higher prices, meaning that at this time there is no fundamental reason to think that the buying will stop. Retail Sales is the most important economic report due out this coming week but it is a volatile report which means the traders are not likely to pay close attention to, whether it is positive or negative. CPI and PPI figures also come out this week but those have not shown any ability in the past few years to generate movement in the market and therefore not likely to have any impact.

Probabilities favor further upside this coming week but some chart patterns do suggest there is a decent possibility that some profit taking will be seen and that a pause or minor dip will occur. Drops back down to test the breakout levels in the DOW and the NASDAQ are possible and likely to happen, even if further upside is to occur thereafter.