DOW Friday closing price - 16412

The DOW had an eventful week in which a new all-time intra-week and daily closing high was made but the bulls were not able to maintain the rally and a negative key reversal "day" was generated on Friday, suggesting that there are still a lot of doubts as to the validity of the price levels presently seen and that there is now a possibility that last week's high at 16630 will become the top to this uptrend. The index did close on the lows of the day and in the lower half of the week's trading range, suggesting the first course of action for the week will be to the downside with last week's low at 16324 likely to be broken before any new buying is seen.

By the same token, the weekly chart of the DOW did not confirm the key reversal as being a major indicator that a top has been found since the bulls were able to generate a green weekly close, also suggesting that the traders are likely to await the next earnings quarter results before deciding on a longer-term direction.

On a weekly closing basis, there is decent resistance at 16452 and strong resistance at 16478. On a daily closing basis, there is now strong resistance between 16572 and 16576. On a weekly closing basis, support is minor at 16065 and minor to perhaps decent at 15698, minor at 15665, minor again at 15072 and decent to perhaps strong at 14799/14810. On a daily closing basis, there is very minor support at 16222, minor to perhaps decent at 16065, minor again at 16027 and at 16040, minor again at 15821 and minor to decent at 15739.

In looking at the DOW on a daily and weekly closing basis, there are strong signs that a major top has now been built. To begin with, the index now shows a double top on the daily closing chart at 16572/16576 and having broken the previous intra-week high at 16588 with a rally up to 16630, the double top is even more indicative as it suggests the rally this past week was mostly short-term trader's manipulated "fluff". This scenario is further strengthened by the fact that the bulls were unable to close the index on Friday above the last 2 weekly closing highs at 16458 and 16478, meaning that if the index generates a red close next Friday that the weekly high close at 16478 will have been tested successfully on 2 occasions.

What could be even more indicative is that the DOW on the last 2 all-time highs made in 2000 and 2007 followed a similar pattern inasmuch as a new all-time high was made, followed by a correction of anywhere from 8-12%, and then followed by a new all-time high a few months later which in turn became the top of the uptrend. In the year 2000 the index made a high of 11365, a correction of 12% down to 9979, and then 5 months later a new all-time high at 11750 which then in turn brought about a 2-year downtrend that ended at 7197. In 2007, the index made a new all-time high at 14020, followed by a 10.7% correction to 12517, and the new all-time high 3 months later at 14198 which in turn brought about a 2-year downtrend to 6469. On this occasion, the index got up to a high at 16588, followed by a correction of 7.6% to 15340 and a now a new all-time high 4 months later at 16630. It is still too early to tell if this particular high at 11630 and this particular month will be the top of this trend but the pattern is very similar, suggesting that the probabilities are high that either the top has been found or will be found sometime this month or next if the pattern is to be repeated.

The reality is that the bulls had the DOW on a new all-time high and did not receive any negative fundamental news that would have caused Friday's negative key reversal to occur. As I have stated before, when new all-time highs are generated the traders are more sensitive to what the index does not accomplish than what it does accomplish and Friday's action is a perfect example of a failure-to-accomplish on the part of the bulls.

The DOW closed on the lows of the day on Friday and with no scheduled economic news due out on Monday, the probabilities favor further downside to be seen. The index shows previous intra-week support between 16191 and 16240 (16257/16264 on a daily closing basis). Below that level, support is found at 16046 (16065 on both a daily and weekly closing basis). A daily and weekly close below 16065 would be a sell signal of consequence on both charts. In addition, a intra-week drop below 16046 in April would generate a classic reversal on the intra-month (higher highs, lower lows) and a close on April 30th below 16046 would generate a key reversal on the monthly chart as well.

To the upside, the DOW will show resistance at 16505/16520, at 16588, and at 16630. Based on Friday's action, if the index is to continue heading lower, the 16505/16520 level should now be considered important and pivotal resistance.

Friday's action was totally unexpected, especially since the Jobs Report was generally better than anticipated and the initial reaction to the report was positive. Having seen the negative reaction, the traders are now likely to see how far the DOW can be pushed to the downside before new buying is found. Even if support is found this week, rallies to the upside are likely to be tentative and probably limited until such a time that the earnings quarter gets fully under way and the earnings come out as expected or better.

Probabilities favor the DOW generating an uneventful trading week with a projected low of 16240 and a projected high of 16505. A drop below 16046 or a rally above 16630 would be eventful and indicative.

NASDAQ Friday closing price - 4127

The NASDAQ made a new 8-week low and generated a red close in spite of the fact the other 2 indexes made new all-time highs and produced green weekly closes. The divergence between the indexes is likely a sign that the uptrend is nearing an end and that money is shifting from speculative and high beta stocks to the safety of the Blue Chip and financial stocks. It is a shift of interest that has not been seen since April 2011 when the index broke above the previous strong resistance at 2800 and began to lead the market up for the next 3 years.

The NASDAQ's leadership seems to have ended as this past week the bulls attempted a "simple task" of getting above the previous week's high at 4286 but failed, having generated a rally on Wednesday to 4285 and a rally on Thursday to 4284. The inability and failure to generate even a couple of extra points when things were positive everywhere else is likely what spooked the market into a strong round of profit taking and/or new selling on Friday. The action strongly suggests that the bulls have lost strength in the index that has been the leader for the past 3 years.

On a weekly closing basis, minor resistance is found at 4276 and decent resistance is found at 4336. On a daily closing basis, minor resistance is found at 4243, minor to decent resistance at 4276 and minor resistance again is found at 4318/4319. On a weekly closing basis, support is minor at 4103 and decent at 4000. Below that level, there is minor support at 3919, and at 3791, and decent at 3589. On a daily closing basis, support is minor to perhaps decent at 4113, minor at 4051 and decent at 3996/3998.

For the first time in 16 months, the NASDAQ closed below the 100-day MA, currently at 4150, suggesting the next objective might be the 200-day MA, currently at 3920. In addition, the index closed on the lows of the day/week and further downside below last week's low at 4118 is likely to be seen this week, meaning that the bulls will have a tough time trying to negate the break of the line.

To the downside, the NASDAQ shows some minor but short-term indicative support at 4097/4103 but if that level breaks there is no support until the 4000 demilitarized zone is reached (3970-4030). There are 2 previous intra-week lows at 3979 and 3968 that are not likely to be broken unless the earnings reports quarter shows negative numbers.

To the upside, the NASDAQ will now show minor daily close resistance at the 100-day MA, currently at 4150, minor intra-week resistance at 4177 and then stronger resistance at 4246, which does include the 50-day MA, currently at 4220.

The chart action last week in the NASDAQ is very indicative of a top to this rally having been established at 4371. Nonetheless, the earnings quarter for the index starts the following week with GOOG reporting on Wednesday April 16th after the close and many of the other important companies the week after. Fundamentals still "rule the roost" and if these companies do show continuing increasing profits, the index may turn around after a brief correction. Nonetheless, at this moment, the bears are in short-term control of the index and the burden of proof is on the shoulders of the bulls.

The NASDAQ has had 2 weeks in a row of 150+ point trading ranges and with 4246 now being a decent and unlikely-to-be-broken-at-this-time resistance, the possibilities of a trading range between 4097 and 4246 are high. Nonetheless, if the 4097/4103 level of support is broken, the possibilities of something like 4150/4177 down to 3970/4030 will increase strongly.

With no economic reports of consequence due out this week and the only earnings reports of importance not due out until Friday and those being in the financial industry, it is likely the index will act more from a technical/chart aspect than anything else. The 4097/4103 level is the pivot point for the week and likely to be seen as soon as Monday. As such, the outlook/direction for the week could be determined early in the week. Probabilities favor the bears.

SPX Friday closing price - 1865

The SPX generated a negative key reversal on the daily chart, having made a new all-time high on Friday and closing below the previous day's close. The index closed near the lows of the week, suggesting further downside will be seen this week below last week's low 1859. By the same token, the index closed higher than the previous week's close, likely meaning the negative reversal is just a short-term signal that could be negated when the financial earnings reports start coming out at the end of the week and at the beginning of the following week.

The SPX did generate a green weekly close that kept the recent short-term uptrend intact on the weekly chart but having closed below the all-time high weekly close at 1878, it does mean the burden of proof is still on the shoulders of the bulls and that the new all-time high was meaningless. The index will likely need fundamental help to accomplish anything more than what was accomplished at the beginning of last week.

On a weekly closing basis, there is minor resistance at 1866 and decent resistance at 1878. On a daily closing basis, there minor resistance at 1872, decent at 1878 and decent to perhaps strong at 1890. On a weekly closing basis, there is minor support at 1841, very minor support at 1831/1836 and then nothing until decent support between 1775 and 1782 is reached. On a daily closing basis, support is minor at 1849, decent at 1841, and very minor between 1826 and 1828. Below that level, there is minor to decent support at 1819, minor support at 1805 and then decent support at 1775.

The SPX will likely be the key index this week as the earnings report quarter kicks off in earnest with the a couple of the top financial firms (JPM and WFC) reporting on Friday before the opening and many of the others reporting in the first few days of the following week. As such, the traders will be watching the SPX for clues as to how the earnings quarter is going to pan out.

To the downside, the SPX shows pivotal support between 1834 and 1839 that also includes the 50-day MA, currently at 1838. Further support is found at 1815 that also includes the 100-day MA, currently at 1825. Nonetheless, the MA's are not all that important in this index as they have been broken to the downside this past year on 4 occasions, meaning the traders are not respecting those lines as they are respected in other indexes. By the same token, previous intra-week lows have been important and if the support at 1834 is broken, then 1815 will likely be seen, and if that support gets broken the index shows no support until 1767 and then at 1750 which is where the 200-day MA is currently at, and that has been a line that has generally been respected in the past.

To the upside, the SPX will show minor resistance at 1872, important and pivotal resistance at 1883, and decent resistance at the all time high of 1897. The 1883 level is likely to be the most important as that was the previous all-time high that lasted 4 weeks and that was tested successfully on a couple of occasions. It is likely the level was broken this past week mostly because there were multiple highs at that price and it is customary that tops are normally built off of spikes. With the multiple top formation now broken and the psychological resistance at 1900 now tested, it is now more likely that a top has been built than it was before this past week.

With no earnings reports in the industry due out until Friday, the probabilities favor an uneventful week with a trading range of 1842 to 1883.

The DOW and SPX had chart reasons for making the new all-time highs (DOW committed to new highs after breaking above 16505 and the SPX making new highs because of a multiple top formation) but now that those reasons no longer exist, the indexes will be free to choose a direction based on the fundamental picture outlined by the earnings reports. By the same token, the reversal on Friday can be attributed to the fact that the fundamental information that came out last week was not strong enough to re-generate the long-term uptrend and that the traders simply "manipulated" the market to even the playing field chart-wise. It is now likely that charts will take a back seat to the earnings reports due out the next 3 weeks.

It was also very evident that the traders took the opportunity this past week to liquidate long-term positions in the technology sector NASDAQ that were showing extremely high PE figures and possibly overdone price levels to the upside that will require a continuing strong fundamental picture to go higher. Earnings are likely to be the key now for the traders to make decisions on a direction for the next 3-6 months.

There are no important economic or earnings reports due out this week that can be considered catalytic, likely meaning that the indexes will trade between support and resistance until the bulk of the important reports come out (the following 3 weeks). Nonetheless, the failure seen on Friday, as well as the failure seen in the NASDAQ the entire week, do suggest that the burden of proof is squarely on the shoulders of the bulls.