DOW Friday closing price - 14973

The DOW made a new all-time high above the previous high at 14887 when the economic reports this past week came in better than expected, suggesting the economy continues to expand. The index began to rally off of Wednesday's ISM Index that was still low at 50.7 but slightly better than the expected number at 50.5, but then gathered strong momentum when Friday's Jobs reports came in much better than expected, including positive revisions to the previous month.

The DOW has now reached a major psychological objective at 15000 that was technically expected to be seen once new all-time highs above 14198 were made the first week of March. Nonetheless, the index did close on the highs of the week and further upside is expected to be seen, especially since no economic reports of consequence are scheduled.

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, support is minor at 14547 and then nothing until minor support is found again 14093 and again at 13981. On a daily closing basis, support is minor to decent at 14687, very minor at 14599 and minor to decent at 14537. Further minor support is found at 14421.

The DOW is now in a free-wheeling mode as all chart obstacles have been removed. Fundamentally though, the economy is still "muddling" along at a slow pace of growth and further upside will not be easy to accomplish. The slowest period of the year (summer) is now starting and the seasonal period that is known by the adage "sell in May and go away" has begun, leaving questions regarding whether the bulls will continue to enjoy the success they have had.

To the upside, the DOW has no resistance other than psychologically at 15000. Nonetheless, the bears will need to get together to defend this area, at least on a daily and weekly closing basis, simply because there is no other area they can "agree on", meaning that the 15000 demilitarized zone should offer the last remaining vestiges of "concerted" chart resistance.

To the downside, the 14687 level has now become a trigger point for the DOW, inasmuch as it was last week's low on both the daily and weekly chart and a break of that level this coming week would be a strong signal that the aggressive buying seen this past week has dried up. The 14500 level will now offer psychological support in addition to the fact the 50-day MA is currently there and that line is always considered important support in a trending market. A close below 14500 would likely cause the index to drop to the next important support level between 14380/14400 where multiple lows exist, that would suggest if seen again, that a break down to the 14000 would occur.

The big question in the DOW this coming week is whether the 15000 level, on a daily and weekly closing basis (weekly more important), will act as strong resistance or not. If the bears are unable to make a stand at this level the upside objective would be impossible to project/predict.

This coming week is likely to be important from the point of view that the bulls will not have any additional fundamental information that could ignite further buying. The "sell in May and go away" period will have started and likely lower projections for the next earnings quarter will start to come out, giving the bears some ammunition for a correction to begin.

NASDAQ Friday closing price - 3378

The NASDAQ once again led the rally to the upside having moved up in price over 3% while the other indexes rallied less than 2% this past week. The index leading the way is a strong bullish statement as it was the same thing that happened the first 3 years after the low of the recession occurred in March 2009, meaning that the buying is once again going to the overall market and not just to specific groups, such as the financials or Blue Chip stocks.

The NASDAQ closed on the highs of the week and further upside is expected. With index showing no previous resistance until the 3480/3500 level, it is likely that the index will continue to lead the way this coming week. It should be mentioned that the resistance at the 3480/3500 level is considered minor and old, meaning that the traders will not be anticipating much selling to occur there if reached. As long as the index is leading the way, it is unlikely the traders will feel any pressure to sell.

On a weekly closing basis, there is no resistance seen in the last 10 years. On a daily closing basis, there is no resistance seen in the last 12 months. On a weekly closing basis, support is decent at 3202/3206 and minor at 3161. On a daily closing basis, support is minor to decent at 3000, very minor at 3222, minor to decent at 3203, and decent at 3166.

The NASDAQ gapped up strongly between 3344 and 3370 on Friday (after the positive Jobs report) and rapidly reached the high of the day at 3388 within the first hour of trading. The high was subsequently tested at 13:00pm but not broken, thus creating a double top on both the 10 and 60-minute chart which does suggest that the first course of action for the week will be to the downside. Nonetheless, since the close on the highs of the week does suggest further upside will be seen at some point this coming week, it likely means the gap area will not be closed and that any weakness on Monday would be short-lived.

To the downside, the NASDAQ will show support at the gap area at 3344 as a closure of the gap would likely mean some further downside would be seen with 3300 as the objective. The 3300 area, on both the daily and weekly closing charts, is now pivotal as close below that level would mean a failure-to-follow-through signal would be given. At this time, though, the possibility of that happening seems remote at best.

To the upside, the NASDAQ does not show any resistance until 3480/3500 is reached. It is old and minor resistance but under the present overbought conditions is likely to offer decent resistance, at least the first time around.

Last week's low in the NASDAQ at 3289 is now an important pivot point this coming week as the index spiked up this past week and closed on the highs of the week suggesting further upside of consequence will be seen. Spike breakouts normally inspire follow through of consequence and based on the 100 point rally that was seen this past week it could mean 3470/3480 might be seen. By the same token, a break below 3289 would be a very negative signal and based on the fact that the index is overbought and that a seasonal correction start is looming, it would likely mean a level that would trigger a strong profit taking binge. The probabilities of 3289 being seen are very low, but it does bear having that level in the back of the mind.

With no close-by resistance to the upside, the traders will be looking more at what the NASDAQ does not do rather than what it does. The index has led the way the last 2 weeks and if that leadership falters this coming week it will likely be indicative. As such, the ratio of gain or loss between the NASDAQ and the other 2 indexes will likely be what the traders pay most attention to this coming week.

SPX Friday closing price - 1614

The SPX vaulted past the previous all-time high at 1597 made just 4 weeks ago as well as above the psychological resistance at 1600 to close on the highs of the week suggesting that further upside, perhaps of consequence, will be seen. The index has now generated a weekly close 55 points above the one in 2007, which in turn was 34 points above the 2000 high, also suggesting that the uptrend now could be stronger than the one in 2007.

Additionally, the SPX has now also tested successfully the previous high daily close at 1561 with a close 2 weeks ago at 1555, meaning that the bulls now have a close-by support base they can rely on thus limiting the risk and making new purchases more attractive at these high levels.

On a weekly closing basis, no resistance is found above. On a daily closing basis, no resistance is found above. On a weekly closing basis, support is now decent between 1553 and 1555, very minor at 1515, and minor to perhaps decent at 1500/1503. On a daily closing basis, support is minor at 1582, minor again between 1552 and 1553 and strong between 1541 and 1545.

It should be mentioned that the mid-term uptrend in the SPX (last 6 months) is very well established having broken above the 50-day MA the second week of December and testing that line successfully on 2 different occasions since, with the last successful retest having been only 3 weeks ago when the index closed at 1541. On a possible negative note though, the index during this entire bullish run during the past 6 months has never been more than 67 points above the line and generally not more than 57 points before the price and line attempt to converge. With the 50-day MA currently at 1557, the index is now 57 points above the line, suggesting that even within the context of the bull trend continuing that it is likely the index will get into a period lasting at least a couple of weeks in which the index will come back down to the line or trade sideways while the line catches up.

It should be mentioned (even though it is highly unlikely to mean anything) that the SPX is showing a clearly defined Megaphone formation on the monthly chart built over the past 13 years with 3 higher highs and 2 lower lows seen. The highs are the 2000 high monthly close at 1517, the 2007 high monthly close at 1549 and last month's close at 1597. The 2 lower closes were the 2002 low monthly close at 815 and the 2009 low monthly close at 735. This is certainly set as a perfect Megaphone formation, if and when the index can close below the 2007 high monthly close at 1549. The traders don't pay much attention to monthly closes because they do not give signals often enough to make it worthwhile, but this is a small factoid that bears keeping an eye on for the May close, especially since the "sell in May and go away" adage could make it happen.

To the upside, the SPX shows no resistance whatsoever so anything is possible. To the downside, the 1600 level is considered psychological support now and likely to be tested once or twice before the traders get aggressive to the upside once again. Short-term daily close support is at 1582 and then important support at 1541.

The SPX is now in a situation where the traders are likely to be paying more attention to what the index does not do than what the index does. Chart-wise, the SPX should continue higher for all the reasons mentioned above, as well as from the fact that as long as the Fed and the Central banks continue to print free money, there will be little reason to sell aggressively. If the index does not go higher, the traders will begin to wonder "why".

The indexes could now be in a "runaway freight train" classification as there seem to be no fundamental obstacles the bulls cannot overcome. Bad economic news has only caused very minor corrections or pauses and good news has stimulated strong rallies. In addition, with the exception of the DOW and the "psychological" resistance at 15000, there are no specific levels where the bears can concentrate their efforts to mount an effective defense, meaning that if the 15000 level in the DOW is broken convincingly, the index could run substantially more without any pause.

There are no economic reports due out this week that have any catalytic power. The important earnings reports are mostly out so from that front nothing can be expected. The bears will be largely dependent on the "sell in May and go away" adage but are facing a situation (Fed open pocket policy) that has never been seen before and is almost unquantifiable. As such, the first few days of the week could be critical as the traders will be looking for clues as to what is likely to happen from here on in.