DOW Friday closing price - 17100

The DOW generated yet another all-time high weekly close, closing above the one made 3 weeks ago at 17068. This is the 8th new all-time high made in the last 12 weeks (since April) when the index first got above last year's weekly closing high at 16478. The index led the market this past week, mostly due to the fact it received the bulk of the important earnings reports and generally they were all much better than expected. The index closed on the highs of the week and further upside above last week's high at 17151 is likely to be seen this week.

It is important to note that on a weekly closing basis the DOW has been on a slightly-biased-to-the-upside "see-saw" for the past 7 weeks, having generated a green and then red weekly close every other week during this period of time, suggesting that if this pattern continues that the index will close in the red next week.

The "general" levels of resistance and support to the upside and to the downside are clearly defined with the 16700 level being support, the 17000 demilitarized zone being pivotal, and the 17300 level being resistance. With the index now clearly above the 17000 demilitarized zone, it is likely the traders are now targeting the 17300 level as the next short-term objective. Nonetheless, it must be mentioned that in 2007 (when the previous all-time high was made) the index got above the pivotal 14000 demilitarized zone with a rally up to 14124 and a close at 14093 and the next week the top of the rally was made at 14198 but a red close was seen. The same kind of scenario could be seen this time as the weekly close was 17100 on Friday and it is likely a higher high than 17151 will be seen this week but a red close generated on Friday.

To the downside, the DOW shows minor support at 16966 and at last week's low at 16950. Further support is found at 16805, at 16746 and at 16703. Stronger support is found at 16240, which includes the 200-day MA.

The DOW has not yet given any indication that the uptrend is faltering so the burden of proof remains on the shoulders of the bears. By the same token, the present rate of growth in the economy does not support much higher prices and with the "sell in May and go away" seasonal correction still having a window for it to occur (in 2011 it started the last week of July), there is real fear that some catalyst could come out over the next 3 weeks and trigger a downdraft. It should be mentioned that inflation now seems to be what the traders are keying on and with the PPI report coming out higher than expected and the CPI report coming out on Tuesday it is possible it could be the catalyst that "turns the tide around".

Higher prices in the DOW are expected to be seen this week but the index remains at great risk of a downturn and a red close next Friday.

NASDAQ Friday closing price - 4432

The NASDAQ generated an inside week (higher lows and lower highs than the previous week), suggesting that the uptrend might be stalling and that the index likely needs fundamental help to go higher. By the same token, the index closed on the highs of the day on Friday and near the highs of the week and further upside above last week's high at 4451 is likely to be seen this week, putting the 14-year high made 4 weeks ago at 4485 at risk of being broken if fundamental help is received. With the bulk of the important stocks in the index due out this week (AAPL, NFLX, and AMZN), it is highly likely that enough fundamental information will be released that will help the traders decide what to do.

On purely a chart basis, the NASDAQ remains with "open air" above as there is no previous history of resistance anywhere around the 4500 area, meaning that the probabilities still favor the bulls. Prior resistance does not even begin until 4696 is reached and even then that resistance is on a monthly basis, meaning that on an intra-month a rally up to the all-time high at 5132 is still viable.

The NASDAQ remains in a strong uptrend, having closed in the green on 8 of the last 10 weeks and on 3 of the last 5 weeks having made a new 14-year weekly closing high. The burden of proof remains on the shoulders of the bears.

The NASDAQ did get down to 4352 on Thursday and now shows a double low in conjunction with the 4351 low seen the previous Thursday. With the previous 14-year high weekly close at 4336 and the previous 14-year high daily close at 4357, it can be said that the drop down to that price was the needed retest of that now pivotal area of support. Technically speaking, the index has now built a new clearly defined and somewhat powerful base from which to launch the index up to the 5000 level.

To the upside, the NASDAQ shows minor intra-week as well as daily/weekly close resistance at 4485. A break above that level shows no weekly close resistance above until 4963 is reached. Nonetheless, on a monthly closing basis, resistance is found at 4696. To the downside, the NASDAQ shows minor intra-week support at 4351 and again at 4336/4339 that does include the previous high weekly close at 4336, which is important and pivotal as a weekly close below that level would suggest a failure to follow through signal would be given. Further but also minor intra-week support is found at 4284 and slightly stronger between 4239 and 4250. A break below 4207 would likely cause a drop down to 4000 as well as being a negative sign.

The NASDAQ is going to be in the spotlight with the index receiving the most important earnings reports for the week (AMZN, NFLX, FB, and AAPL). If the bulls are unable to regenerate the uptrend by getting above 4485 and then maybe even above the top of the 4500 demilitarized zone at 4530, the traders will likely turn negative and the seasonal correction begin. It is a pivotal week with 4485/4530 to the upside and 4336/4351 to the downside as the trading range the traders will be looking at.

Probabilities continue to favor the bulls.

SPX Friday closing price - 1978

The SPX had an uneventful inside week but did close near the highs of the week, suggesting further upside above last week's high at 1983 will be seen. With the all-time high being at 1985, the probabilities are good that a new all-time high could be made this week, especially since all of the main stocks in the index (GS, MS, JPM, C, BAC) reported better than expected earnings.

The SPX has now been in a 3-month uptrend that has included 7 "mini" corrections or drops in price but where none of the previous lows has been broken, meaning that the traders continue to have confidence that further upside will be seen. The 2000 level is a major magnet for the bulls as reaching that level would be seen a psychological victory of consequence.

To the upside, the SPX shows resistance at 1985 and then nothing until the psychological resistance at 2000 is reached. To the downside, last week's low at 1955 will offer some minor support. Further support, though also minor in nature, will be found at 1952, at 1944 and a bit stronger at 1925 (1930 on a daily closing basis). Below that level, minor support from previous highs is found between 1897 and 1902, and then nothing until the 1850-1862 level. It should be mentioned that there has been no corrective phase on the weekly chart for the past 3 months, as such there is no support of consequence until 1814 is reached. On a weekly closing basis, there are no support levels of consequence nearby but a weekly close below 1936 would now be considered a decent short-term negative.

The SPX chart does suggest the index will be trading between the 1950 and 2000 level for the next couple of weeks, or until something is decided in the index market.

The first week of the earnings quarter is now over and there were no major surprises. Earnings in general continued to be as expected or better than expected and no negative catalysts have yet been seen, meaning that the uptrend continues. This coming week some of the more important earnings reports are due as AAPL, NFLX, AMZN and FB report, which does suggest the traders could have enough information to start making some decisions.

By the same token, the markets are presently being affected by the conflict being seen in the world (the downing of a commercial airliner in the Ukraine and the Israeli attack on Hamas in the Gaza strip) and these are events whose effect is difficult to evaluate, especially on a longer term basis. Some volatility was seen this past week because of these events but they were not negative enough to cause any kind of damage on the charts.

By the same token, this coming week could end up being pivotal as the seasonal correction is still in the "window of opportunity" and after the bulk of the earnings reports are out, the traders could decide that there is no pressing reason to continue higher without some healthy correction occurring first. That decision could be made as soon as next Friday.