DOW Friday closing price - 15570

The DOW generated another strong up week (the third in a row) moving up an additional 171 points above last week's close and adding up a total of 881 point rally over the past 3 weeks, ever since the 200-day MA was tested successfully. The index closed on the highs of the week and further upside is expected to be seen this coming week.

The bulls were successful in negating a bearish Head & Shoulders formation on the weekly closing chart when the DOW closed above the right shoulder on Friday at 15451. Nonetheless, the formation did not exist on the intra-week chart and does not necessarily mean that the uptrend has resumed, just that the index is not in a bearish scenario.

On a weekly closing basis, decent to perhaps strong resistance is found at 15658. Above that level there is no resistance until psychological resistance is reached at 16000. On a daily closing basis, resistance is decent at 15658 and decent to strong at 15676. On a weekly closing basis, support is minor at 15072 and decent to perhaps strong at 14799/14810. On a daily closing basis, minor support is found between 15409 and 15413, minor again at 15168, decent between 14960 and 14996, and decent again at 14776. Below that, decent to strong support is found at 14659.

The successful retest of the 200-day MA as well as the resolution of the Debt Ceiling issue has re-fueled the buying interest in the DOW. The index is now only 140 points from its all-time high and having closed on the highs of the week it is likely that the bulls will be trying very hard this coming week to resume the uptrend. Nonetheless, the bulk of the important earnings reports are out and the bulls are not likely to have the kind of buying support needed now unless the economic reports continue to improve. The index has been in a 5-month sideways trend between 14700 and 15700 and the probabilities favor that sideways trend continuing.

To the upside, the DOW shows resistance at 15658 and at 15709 which does include the "general" resistance at 15700 found 300 points below a major even level. To the downside, there is very minor support at 15409 and then basically nothing until the 15000 level is reached.

The DOW has generated a 13-day rally in which 12 out of the 13 days were higher lows than the previous day. The one day where a lower low was seen was very minor as it was only 28 points below the previous days' low, meaning that chart-wise the index is potentially vulnerable to dropping back the same 881 points that have been seen over the past 3 weeks if some negative were to come out. This scenario does suggest that the bulls are committed to making new all-time highs as a successful retest of the highs at this point would tend to "deflate the balloon" as fast as it has been inflated.

The DOW will need to accomplish the new all-time high early in the week because after Monday afternoon's earnings report on AAPL there will not be much help received from the earnings front. The index will run into stiff resistance at 15658 (80 points above Friday's close) and what happens there will decide whether the uptrend has resumed or whether the index is still in a sideways trend. The probabilities favor the latter.

NASDAQ Friday closing price - 3914

The NASDAQ made yet another new 13-year high (the 6th out of the last 7 weeks) and crept closer to the psychological resistance at 4000. The index closed near the highs of the week, helped by better than expected earnings reports on NFLX and on AMZN which did generate new all-time highs in those stocks as well, suggesting that further upside will be seen this coming week. With the earnings report on AAPL due out on Monday after the close, also likely to be much better than expected, there is a decent to strong probability that the upside will be seen at the beginning of the week before some profit taking is considered.

The NASDAQ is beginning to reach an area of decent to strong resistance from the year 2000 between 4000 and 4300 that did stop the rallies, both on the way up to the all-time high at 5132 and on the bounce from the way down as well, that is unlikely to get broken at this time without some form of correction or profit taking occurring first. As such, buying now is likely to be limited both in price scope and in volume.

On a weekly closing basis, minor resistance is found at 4069, and decent to perhaps strong resistance is found between 4234 and 4252. On a daily closing basis, there is no resistance for the past 12 months. On a weekly closing basis, support is very minor at 3791 and then nothing until very minor support is found at 3689. Below that, decent support is found at 3589. On a daily closing basis, support is minor at 3907, very minor at 3794, minor at 3774 and a bit stronger at 3761.

The NASDAQ continues to outperform all the other indexes as the Tech sector is on fire. The earnings reports on AMZN and NFLX re-ignited the feeding frenzy as those reports were both much better than expected. It is likely that AAPL will follow suit on Monday evening, especially since the I-Phone 5 generated record number of purchases when unveiled last month. With all of these stocks not having any reason to go down in price, other than perhaps for some profit taking, there is little doubt that without some unexpected negative economic news the index will continue to rally and hold its gains.

Nonetheless, after Monday afternoon and the AAPL earnings report there is going to be few reasons to generate further upside of consequence, especially since the index is reaching levels of resistance that have proven to be strong in the past. In January of the year 2000, prior to the run up to 5132, the NASDAQ got up to 4192, corrected down to 3711, and then rallied back up to 4303 a few weeks later. A correction once again was seen down to 3748 before the trend up resumed and the 5132 all-time high was made. After the all-time high was made, the index fell down to 3643, rallied to 3989, fell to 3042 and then proceeded to rally back up to 4289. A few weeks later after another correction was seen, down to 3521, the index rallied one last time to 4259 before the downtrend resumed.

All this history does suggest strongly that the NASDAQ will begin to see strong profit taking "and" volatility once it gets above the 4000 level. The probabilities favor a trading range the rest of the year between 3700 and 4300. With the index likely to get up to 4000 this coming week, it will reach a level that is likely to be the key pivot point for the next 3 months.

SPX Friday closing price - 1758

The SPX made yet another new all-time weekly closing high on Friday, 14 points above the previous week's high and 30 points above the previous all-time high at 1729 seen 6 weeks ago. The index closed on the highs of the week and clearly above the 1750/1755 level that was considered a possible upside target, meaning that the 1800 level could now be the objective.

The SPX is presently more of a follower of the NASDAQ than a leader forging its own path, meaning that the upside objective is likely to be linked to whatever price the other index finds resistance at. By the same token, the index has rallied only 4% over the NASDAQ's 11% over the past 4 months and keeping in mind that ratio and that that the 4200-4300 level is the upside objective in the NASDAQ it would mean the SPX will have an 1800 objective.

On a weekly closing basis, there is no resistance above. On a daily closing basis, there is no resistance above. On a weekly closing basis, there is minor resistance at 1690 and minor again at 1667. Below that level, minor to decent resistance is found at 1632 and decent at 1592. On a daily closing basis, support is minor at 1746, minor again at 1725, minor to perhaps decent at 1698/1700. Below that, there is decent/copious support between 1676 and 1685.

The last rally in the SPX seen in June is eerily similar to the one being seen now. The index then rallied over a period of 20 days before encountering any new selling and ultimately ended up with a 160 point rally from low to high before any correction was seen. The index has now rallied for 14 days and has seen 113 points so far since the low at 1646 was made. With 1800-1805 being the potential upside objective, that would put the index up about 160 points as well.

By the same token, the SPX is now at the top of a channel using the daily closing prices that began on May 21st with the 1669 close seen that day. The channel now has 3-points on it, making it a valid channel line, meaning that further upside up to the 1800 level is not likely to be seen unless such a rally is seen on an intra-week basis. Simply stated, the channel suggests that unless the index continues to "inch up" over a period of 4-6 weeks, it is unlikely that 1800 will be seen on a closing basis.

To the downside, the SPX has no support as the rally from the 1646 low has been mostly straight up. There is very minor support at Wednesday's low at 1740 but if any fundamental negatives come out and the index breaks that support, there is nothing to stop the fall until the "psychological" support at 1700 is reached. In reality, the probabilities would favor a drop all the way down to 1675 should the index get going to the downside.

The bulls are committed to at least keeping the SPX up at these present levels even if they cannot keep the index inching higher toward 1800. Simply stated, any weakness right now would likely unexpected and likely indicative of a problem.

Probabilities favor further upside but how much and how fast is a question that has no clear answers right now. During the last similar rally in June the index spent 17 days trading mostly sideways between 1676 and 1700 with one small short-lived rally to new highs at 1709. It would not be surprising to see the index trade between 1740 and 1764 for the next 4 weeks with perhaps one small short-lived rally up near 1775, or even up to 1800, during that period of time.

With the help of some blow-out earnings in AMZN and NFLX the bulls accomplished most everything they wanted this past week. New all-time highs were made in the SPX, new 13-year highs were made in the NASDQ and the bearish Head & Shoulders formation in the DOW got negated. The bears are now back totally on the defensive and needing negative fundamental news to generate any kind of selling interest.

Quite a few important economic reports are due out this week with the ISM Index on Friday being the most important. Nonetheless, economic news has not been generating any selling of consequence even if negative as the Fed is still the story, not the economy. As such, there seems to be nothing at this time that could cause a drop in the indexes, other than perhaps a chart area where "profit taking" would make sense.

The probabilities favor a supported market this coming week with dips being bought. Nonetheless, the one thing to follow closely this week will be the volatility index since the bulk of the earnings reports are out and there are certainly decent reasons for the traders to take profits if higher price levels are accomplished.