DOW Friday closing price - 15354

The DOW continued its meteoric rise making yet another new all-time high but on this occasion doing it in the face of some less-than-expected economic reports. The traders are totally ignoring the news and plowing forward as if there is no tomorrow. It is likely that some of that money that has been on the sidelines for the last 4 years is starting to come in trying not to miss this move that is now encompassing the last 6 months. The index closed on the highs of the week and with no economic reports of consequence scheduled for the beginning of the week, the probabilities are high the uptrend will continue at the beginning of the week.

The bears in the DOW tried to make a stand at the "general" resistance level at 15300 (300 points above the even number) and did hold the index down for 2 days, but the carnage of the bears continued on Friday when the level was broken decisively. It should be mentioned that Friday's action is meaningful as the volume was the highest seen since April 19th (4 weeks) and the 9th highest seen during the past 12 months, suggesting that "new money" is coming into the index and that further buying, perhaps of consequence, will be seen this coming week.

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 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 "runaway freight train" category and with no economic news scheduled for the first 2 days of the week, the upward movement is likely to continue unabashed, especially now when the volume and participation has increased. On Wednesday though, Fed Chief Bernake is giving testimony and there is a decent possibility that some exit strategy from the Bond purchases will be mentioned. The mention of an exit strategy could be a turning point in the market as the rally has been mostly Fed driven and if the Fed starts to talk about cutting back the stimulus program, it could cause a profit taking event to occur. As it is, it seems unlikely that the Fed wants this rally to continue at the rate it is going since it has begun to feel like a bubble.

The "sell in May and go away" adage is still within the boundaries of it as the adage suggests that long positions be liquidated in "May" as the next few months into the summer would be downhill. The adage says nothing about whether the selling would "start" at the beginning of the month or at the end of the month. By the same token, if Bernake does not mention an exit strategy (or even if he does but it is in the future and not anytime soon) the market is likely to continue higher for perhaps as much as another 2 weeks. The 2 big economic reports for the month do not come out until the first week of June (ISM Index on June 3rd and Jobs report on June 7th) and it is unlikely that any other economic reports will have any kind of impact as the previous ones have generally been ignored.

Chart-wise, the DOW has no resistance above. The 16000 level could offer some psychological resistance but the 15000 level, which should have been more psychologically strong, did not hold the index back. As such the traders cannot depend on 16000 stopping the rally. One other possible psychological resistance is at 16206 which is 15% move above the previous all-time high weekly close at 14093. A 15% rally above a previous high is generally considered by traders as a point to take profits.

To the downside, the DOW is now at risk of a strong move down should a stumbling block be found. The index has built no support of consequence on the way up and therefore could drop precipitously if a top is found. The closest chart support is found at the 14700 level which is 655 points below Friday's close. The level includes the last "mini" 1 day correction of any consequence as well as the 50-day MA. A bit stronger support, but still minor in nature, is found at the 14550 level where "some" work was done for 5 weeks, both to the upside and to the downside. Drops down to that level would be very viable as it would mean an 800 point correction, which is often what the index shows the "first time" it corrects from a major rally. Further support, but still minor in nature, is found at the previous high weekly close at 14093.

At this moment though, the bulls are in control of the DOW and the probabilities are high that the index will continue higher at least for Monday and Tuesday.

NASDAQ Friday closing price - 3498

The NASDAQ did not lead the rally this past week (the SPX did) but the index did not lag either as new 13-year highs were once again made. The index blew by an old and minor weekly close resistance from the year 2000 at 3483 leaving empty space above until 4246 is reached. Nonetheless, on an intra-week basis the index still shows some resistance at 3535. By the same token, the index is "running" to the upside and did close 62 points above the previous week's close and on the highs of the week, suggesting that if no negative news comes out this week that the 3535 level could be smashed as well.

The NASDAQ now shows 12 days in a row of higher lows than the previous day and with no economic news of consequence scheduled for Monday or Tuesday, the trend is likely to continue.

On a weekly closing basis, there is no resistance seen in the last 10 years, but there is minor weekly close resistance from the year 2000 at 3526. 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 very minor at 3296 and minor to decent at 3000.

The NASDAQ is expected to continue this eye-popping rally, at least for Monday and Tuesday, The index has not shown a previous day's low broken during the last 12 days and with the index closing on the highs of the day on Friday and in a small spike up type fashion it means there is no reason for that trend to change, at least not until Bernake talks on Wednesday. To the downside, the NASDAQ does not show "any" support until the 3300 level is reached. The support is from a previous high daily close which is normally considered minor. Nonetheless, the 50-day MA is currently at that level as well, suggesting the bulls would be aggressive buyers at that price should the index get down that low. Stronger support is found at 3200. Any break below a previous day's low could be a sign that the index is ready to correct. A break of a previous day's low is not expected to be seen as the bulls cannot afford even a pause at this time.

The NASDAQ is the "only" index with a previous intra-week high close-by but having closed above the weekly closing high (3483) seen on that occasion, it must be assumed that further upside will be seen. Next weekly close resistance level is found at 4246.

SPX Friday closing price - 1667

The SPX led the way up this past week (rallied 2.3% compared to 1.8% and 1.7%) as traders bought the financial stocks, which compared to other industries are still considered undervalued. The probabilities favor the index continuing to lead the way up from here as long as the market continues higher.

The SPX has now rallied 324 points since the last correction of at least 90 points and that is the second biggest rally in the last 14 years without that kind of a correction (the last time the index rallied without a 90 point correction was 2003 when it rallied 374 points). It should be mentioned that the 374 point rally came from a major low and not from an already overbought index.

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.

Like all the other indexes, the SPX has rallied straight up without building any support in the process. The closest support is found at 1582 which is also where the 50-day MA is currently located. Like I mentioned last week, the SPX been trading above the 50-week MA for 12 months and above the 50-day MA for the past 6 months but this past week the index surpassed the highest differential between the line and the price seen since March 2009 when the index was 185 points above the 50 week MA and 65 points above the 50-day MA. The differential this week was 85 points on the daily chart and 217 on the weekly chart, which is far in excess of the average during the past 20 years which has been 60 points and 170 points respectively. The action being seen in this respect does put the index in the category of a bubble and way overdone.

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 should continue higher this coming week as there are no levels above where the bears can concentrate their efforts on. With the "runaway freight train" status, the traders will continue buying but keeping an eye on any failure that may be seen.

The traders continue to ignore less-than-expected economic news as every dip is being bought. The bears had an opportunity to generate a very minor break in the intra-day charts on Thursday when Initial Claims and Housing information ("B" class reports) came out quite a bit worse than expected. Nonetheless, in spite of the indexes being under sell pressure all day, the bulls failed to even break the previous days' low, which would have been considered a "very minor break". Nonetheless, on Friday when a "C" class report in Michigan Sentiment came out better than expected new and impressive highs were made. It is clearly evident the bears are powerless at this time and that bad news is being ignored.

This coming week only has report of any consequence due out. The Durable Goods report, a "B+" type, will come out on Friday morning before the market open. No economic reports are scheduled for the beginning of the week. Bernanke is scheduled to give testimony on Wednesday morning at 10:00am and it is possible he might mention an exit strategy for the Bond stimulus program that might cause some selling to occur. Other than that though, there doesn't seem to be anything that can stop this train at this time.