DOW Friday closing price - 16408

The DOW did not follow through to the downside after last week's mini sell signal on the weekly closing chart and did generate a turn-around of 380 points to close near the highs of the week, suggesting further upside above last week's high at 16460 will be seen this week. By the same token, the index has been doing something like this for the past 8 weeks with closes at 16103, at 16452, at 16065, at 16302, at 16323, at 16412, at 16026 and at Thursday's weekly close at 16408, meaning that the traders are trading without a direction or trend and this time. In addition, 3 of the 7 previous closes were on the highs or lows of the week (2 on the lows and 1 on the highs) and yet no follow through was seen on those, also suggesting that getting above last week's high this week is not necessarily a high probability.

The DOW has now been unable to make a new all-time weekly closing high for the past 16 weeks since the close on December 23th at 16478. In fact, the all-time high weekly close has now been tested successfully on 2 occasions during the past 4 months with high weekly closes at 16452 (first week of March) and at 16412 (last week of March) and if the index closes in the red next Friday below 16408, it will become the third successful retest of the all-time high, meaning that the traders will not likely give the index many more opportunities to resume the uptrend.

On a weekly closing basis, there is minor resistance at 16412, decent at 16452 and strong at 16478. On a daily closing basis, there is now minor resistance at 16424, at 16437 and at 16452 and decent recent to perhaps strong resistance between 16572 and 16576. On a weekly closing basis, support is decent between 16026 and 16086, 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 minor support between 16245 and 16264, decent between 16026 and 16065, minor support at 15821, minor to decent at 15739 and strong at 15372.

On a chart basis alone, the DOW could give a clue as early as Monday's close because if the index goes below Thursday's low at 16368 it will set up Thursday's high at 16460 as a double high when compared to April 10th's high at 16456. In addition, if a red close is seen on Monday, it will make Wednesday's close at 16424 into a successful retest of the previous daily closing high seen on April 9th at 16437 and also make it into the second successful retest of the double top on the daily closing chart at 16576/16572. By the same token, the index is likely to pivot for the next 2 weeks on earnings and economic reports and unless those reports are uneventful, the chart signals will not likely be heeded even if given.

It is evident that a direction for the next 3 to perhaps 6 months will be given in the DOW over the next 2 weeks since the bulk of the important earnings reports will be out this week and the bulk of the important economic reports will be out the following week. It should also be mentioned that the following week will include the beginning of May and the old adage of "Sell in May and go Away" will likely kick in, suggesting that the burden of proof will be on the shoulders of the bulls.

The DOW is likely to be under selling pressure at the beginning of the week as the bulls failed to close the index on a positive note on Thursday. With no important earnings or economic reports due out on Monday morning, the index is likely to trade technically and having seen 400+ point trading range for the past 8 weeks and the index having closed on Thursday around the high of the trading range, the probabilities favor the downside on Monday. Nonetheless, on Tuesday, Wednesday and Thursday some important earnings reports will come out (NFLX, BA, PG, T, and AAPL) and those could help the traders make some decisions.

Support in the DOW will be found between 16200 and 16240 and resistance found between 16460 and 16505. Probabilities favor a red close on Monday.

NASDAQ Friday closing price - 4095

The NASDAQ generated a positive reversal week, having made a new 6 month low and then turning around to close in the green and near the highs of the week, suggesting further upside above last week's high at 4110 will be seen this week. The index got down to the 200-day MA, currently at 3950, for the first time in 16 months (got down to 3946 last week) and as would be technically expected bounced from that line as a break of that line without tangible negative news was unlikely to happen the first time around. With the index having closed near the highs of the week and in the green on Friday, further upside is likely to be seen Monday, with the next resistance level not found until 4135 is reached.

The NASDAQ will receive a couple of important earnings reports this week with NFLX reporting Monday, AMZN on Tuesday and AAPL reporting Wednesday, all after the close. By the same token, the tech sector started reporting earnings last week through GOOG and that report came in less than expected, meaning that unless the earnings reports in the tech sector turn around, the sell interest will return.

On a weekly closing basis, minor resistance is found between 4097 and 4103, minor to perhaps decent resistance is found at 4197, very minor at 4276 and decent resistance is found at 4336. On a daily closing basis, minor resistance is found at 4123, minor again at 4183, minor to perhaps decent at 4243 and at 4276. On a weekly closing basis, support is decent at 3999/4000, minor at 3919, and at 3791, and decent at 3589. On a daily closing basis, support is decent between 3996 and 3999, minor at 3921, minor again at 3857, and minor to perhaps decent at 3677.

Technically speaking, the NASDAQ has now fulfilled the short-term downside objectives having successfully tested the 200-day MA as well as the 4000 psychological support level. The index will now look for direction off of the earnings reports due out this week (AAPL, AMZN, BIDU, and NFLX), as well as the economic reports due out the following week. By the same token, it is clearly evident by the drop down to the 200-day MA for the first time in 16 months that the momentum and glitter of the tech sector has worn off and that to resume the uptrend and leadership of the market, the tech sector has to show much better numbers than have been shown recently. The probabilities do not favor that scenario at this time.

To the downside, the NASDAQ shows support at the 4000 demilitarized zone and a bit stronger at last week's low of 3948. Below that there is no support until minor support is found at 3855 that includes the 50-week MA and then it is open air until minor support is once again found at 3650. To the upside, the index shows very minor resistance at 4135, minor at 4177 and minor to decent resistance at 4185 and decent resistance at 4246.

The NASDAQ will definitely be the index to watch this week with most of its important stocks reporting earnings between Monday afternoon and Thursday afternoon. Nonetheless, the earnings really do need to be much better than expected in order for the index to rally indicatively. With GOOG already reporting disappointing earnings last week, it is unlikely the earnings will be good enough to generate a rally of consequence.

The NASDAQ chart is showing 3 successful retests of the 14-year high at 4371 with highs at 4344, at 4285, and at 4185. If the most recent high at 4185 is broken it will give the bulls some ammunition to think the index will go higher but then again the January high at 4246, seen as a previous important weekly high from January as well as from a weekly closing high seen 13 years ago, is likely to be the resistance that will determine what the index will do for the next 3-6 months.

Expect the NASDAQ to get up to at least 4177 this week with the help of any of the earnings reports coming in better than expected. If the index is unable to get above 4185 the disappointing will be palpable, likely causing an immediate move back down to the 200-day MA. A break below 3946 will likely cause a fast move down to the 3700 level which will be the main objective to the downside at this time.

SPX Friday closing price - 1864

The SPX negated the minor sell signal given the previous week by closing above the 1841 level on Friday. Most of the important earnings reports that came out on its major financial stocks were positive and the bulls were able to generate enough buying interest to prevent further downside from being seen after the index closed on the lows of the week last week. Nonetheless, the bulls did not have enough strength to close above the 2 previous weekly closing retests-of-the-all-highs at 1866 and 1865, meaning that next Friday's close is going to be strongly important and likely decisive.

The SPX is likely to show some strength at some point this week and go above last week's high at 1869 since the index closed near the highs of the week and no retest of the all-time high at 1897 high on the intra-week chart has yet been seen. Nonetheless, a rally above last week's high and a red close next Friday would be the perfect chart scenario for the bears to generate a strong correction thereafter.

On a weekly closing basis, there is minor to perhaps decent resistance at 1865/1866 and decent to perhaps strong at 1878. On a daily closing basis, there is minor to decent resistance at 1872, decent at 1878 and decent to perhaps strong at 1890. On a weekly closing basis, there is minor support at 1841, decent at 1815, minor at 1805 and decent at 1775/1782. Below that level, there is no support until minor support is found at 1709. On a daily closing basis, there is minor support at 1848 and minor again at 1841 and decent at 1815. Below that, there is very minor support at 1809, minor to perhaps decent at 1780 and decent to perhaps strong at 1741.

The SPX led the indexes up this week having rallied 2.7% over the other 2 indexes that rallied 2.4%. Nonetheless, with most of the important earnings reports already out, the traders will not likely be concentrating their attention on this index this week and will leave the decisions to be made by the other 2 indexes. By the same token, the SPX is the only index that has not yet tested its all-time high on the intra-week chart and that is a chart need that needs to be fulfilled before the traders can consider a correction. As such, the one thing that will be in the minds of the traders is to get above last week's high at 1869.

To the upside, the SPX shows intra-week resistance between 1878 and 1883. The probabilities are high that the index will rally up to that area this coming week. A rally above 1883 will open the door for the bulls to attempt to resume the uptrend and get the index up to and above the all-time high at 1897. To the downside, the index shows important support at 1815, which was the previous week's low and now a support that if broken would likely stimulate new selling and of consequence with the next level of support not found until the 1737 area is reached. It is unlikely that the 1815 level will be broken this week if the index is able to get above last week's high at 1869, but if the index closes in the red on Friday, the probabilities will increase strongly that a break of 1815 could be seen the week after when all the important economic reports for the month come out.

The next 2 weeks are likely to be decisive for the market. The first 3 weeks of the earnings quarter will come to an end on Friday and the following week most of the important economic reports come out, meaning that the traders will have enough information to make decisions for what the market is likely to do the next 3 months.

The "Sell in May and go Away" adage will come into play the following week and with the action seen the last couple of weeks, especially with the sell signals given the previous week, the probabilities favor the market getting into a decent to strong correction. Much will be dependent on the information that comes out the next 2 weeks but the burden of proof is on the shoulders of the bulls as what is needed is a "strong" indication that the economy continues to improve. The key word is "strong" and that is unlikely to be seen since the economy seems to be mostly "muddling" along and not growing at a pace that would instill confidence in higher prices than presently seen.

Expect to see volatility this week as the earnings reports come out. Due out this week are NFLX, AAPL, AMZN, T, BA, FB, CAT, GM, MSFT, and V and after those reports are out the traders will have more complete information as to how the earnings quarter will have fared.