DOW Friday closing price - 16458

The DOW broke the general support at 16300 on Monday (got down to 16240) but then failed to follow through to test the support at 16000 and ended generating a reversal with a close in the green and near the highs of the week, suggesting further upside above last week's high at 16505 will be seen this coming week.

By the same token, after the initial rally seen on Tuesday and Wednesday, the DOW mostly idled sideways the last 2 days of the week with the bulls unable to bring in new buying, likely meaning that fundamental help is needed to generate the kind of buying to make a new all-time high. On the other hand, the other 2 indexes did manage to make new highs this past week, suggesting that the DOW will do so as well.

On a weekly closing basis, there is minor resistance at 16478. On a daily closing basis, there is minor resistance at 16481 and again at 16530 and minor to perhaps decent at 16576. On a weekly closing basis, support is minor 15755, minor again at 15072 and decent to perhaps strong at 14799/14810. On a daily closing basis, very minor support is found at 16417 and then minor at 16257. Below that level, there is minor support at 16097, minor again at 15821 and decent at 15739.

On a weekly closing basis, the DOW has now traded sideways in a 41 point trading range for the past 4 weeks without continuing the uptrend that was in effect for the previous 12 weeks. It can be said that the index is "consolidating" its gains before continuing upward but the reality is that the bulls are running out of ammunition and time with which to take the index higher as the bulk of the important earnings reports will be out by the end of the month (9 trading days) and the seasonal tendency to generate a correction in the first quarter of the year will be upon them, making it very difficult to do much more if it is not done in the next 2 weeks.

The reversal off of a spike low and the close near the highs of the week does suggest that the DOW will be making a new all-time high this coming week. The other indexes have now gone above last month's high and there is no reason for the DOW not to do the same as the chart does suggest it will happen. Looking back at the top made in the year 2000, the index did go above December's high in January by a small amount and then started a downtrend that lasted 33 months. It is a very good possibility that a major high will be made this month/year, if for no other reason than it seems the index has a pattern that generates tops every 7 years, with the last one being in 2007.

To the upside, the DOW is showing minor resistance at 16505, again at 16562, and at the all-time high at 16588. A break above 16505 does suggest a domino-like effect that would cause the index to break all the other resistances. By the same token, to the downside, failure to break above 16505 followed by a break below Thursday's low at 15375 would make the 16505 level the second successful retest of the all-time high and would give the bears ammunition to take the index lower. Further support is found at 16240 but a break of that level would likely be a strong sell signal that would be difficult for the bulls to negate.

This coming week 8 of the important stocks in the DOW will be reporting earnings (IBM, JNJ, MCD, MSFT, PG, TRV, UTX, and VZ). Another 7 will report the week after. It is likely the index will take the lead as the SPX did last week with its main stocks were reporting earnings. This was certainly evident on Friday when the DOW closed in the green and the SPX closed in the red after disappointing earnings came out. It is possible and perhaps even likely the same scenario will occur with the DOW this week.

NASDAQ Friday closing price - 4197

The NASDAQ made yet another new 13-year weekly closing high on Friday helped by the fact that 4 of its 6 main stocks (AAPL, AMZN, GOOG, and PCLN) all had green close weeks. In addition, the index had a positive reversal week and closed near the highs of the week suggesting further upside will be seen with the September 2000 high weekly close at 4234 as the minimum upside objective.

The NASDAQ will not be receiving the bulk of its important earnings reports until the week after but NFLX will be reporting on Wednesday and that could give the traders a clue as to what to expect the following week.

On a weekly closing basis, decent to perhaps strong resistance is found between 4234 and 4246. On a daily closing basis, there is minor resistance at 4218 and then nothing for the past 12 months. On a weekly closing basis, support is minor but likely indicative at 4131, minor support again is found at 4000, very minor at 3919 and at 3791, and decent at 3589. On a daily closing basis, support is very minor at 4176, decent at 4113, minor at 4068 and decent again at 3985/3993.

The NASDAQ started out the week on a weak note having broken the 13-day support at 4103 with a drop down to 4097 on Monday. Nonetheless, the bears were unable to generate any follow through on that break and a reversal occurred on Tuesday that brought about enough buying to take the index above the previous week's high at 4182 and up to 4219. The index closed near the highs of the week and further upside is likely to be seen.

To the upside, the NASDAQ has no recent resistance but from the year 2000 strong intra-week resistance will be found at 4259 and at 4289 (4234 and 4246 on a weekly closing basis). A rally up to one of those 4 levels mentioned is likely to be seen this week with any of them causing fulfillment of the chart to be accomplished. It is highly unlikely that further upside, above a max of 4303 will be seen, meaning that the index is near what is likely to be a major top, or at least a top that will last a few months.

To the downside, the NASDAQ the 4097/4103 level is now pivotal, especially on a daily closing basis as a double low at 4113 has now been built. A break of that support would be a sell signal of consequence, especially since the 50-day MA will likely be at that same price by the beginning of next week and would mean that line would be broken as well. Below 4097/4103 there is no support until the 3979/4000 level is reached.

The chart suggests the NASDAQ will continue higher this coming week, likely to close out the week somewhere between 4234 and 4246 next Friday, and then after the bulk of its important earnings reports come out between January 28th and January 31st the traders deciding to liquidate their long positions. It is interesting to note that in August of the year 2000, just prior to the index going into a swoon (ultimately down to 1108), the index closed at 4206. With the close of the month coming after most of the important earnings reports come out the following week, it is very possible that the index will close out the month around that price and start a downtrend in February.

Expect higher prices in the NASDAQ this coming week but likely limited in nature and not more that 40-50 points higher at the end of the week.

SPX Friday closing price - 1838

The SPX generated a reversal week having made a new all-time high at 1850 but then closing in the red. The SPX was the one the traders keyed on this past week as most of the important earnings reports this past week were in the index. It is evident that the traders were disappointed in the reports, having generated a reversal at a time when it matters on the chart.

It should also be mentioned that the SPX chart now shows a double top on the intra-week chart at 1849/1850 as well as on the daily closing chart at 1848/1848. The bulls were depending on good earnings in the index stocks to generate new buying but with that failing to be the case, they will now have to rely on the other indexes "carrying the load".

On a weekly closing basis, there is minor resistance at 1841/1842. On a daily closing basis, there is minor resistance at 1842 and decent at 1848. On a weekly closing basis, there is minor support at 1831 and decent support at 1775. Below that level, there is minor support at 1690 and minor again at 1667. On a daily closing basis, support is minor at 1831, minor to perhaps decent at 1826, very minor at 1808, minor at 1785 and 1781, and minor to perhaps decent at 1775.

The SPX had its test this week and failed. The earnings reports on the 8 index stocks that reported this week were mixed but not good enough to generate new buying interest. The index has not only built a double top on the daily chart now but has done it at a time and price that speaks loudly. The 1850 level has to be considered a psychological resistance not only by its price but the fact that the 2 previous all-time highs seen in the year 2000 and 2007 both were in that middle of the 100's price vicinity. In addition, it comes at a time when the seasonal tendency is to have a meaningful correction.

To the downside, the SPX will now have the 1810/1815 level as a pivotal support area as the most recent low was 1815 and the 2 previous all-time intra-week highs were at 1813 and 1811. It should also be mentioned that the 50-day MA is currently at 1810 and that line has not been broken for 3 months. A close below 1808 (previous all-time high daily close) will give a failure to follow through signal as well as a sell signal that at this time of the year would be very indicative that a top of consequence is in place.

It is not likely that the SPX will breakdown this coming week as the market is still dependant on the earnings reports due to come out over the next 2 weeks in the other indexes. By the same token, it is unlikely that the index will lag behind the other 2 indexes and not make new highs even if the other indexes do.

. Expect some sideways trading in the SPX for the next week with perhaps a slight bias to the downside. A trading range between 1823 and 1842 is a high probability as there is some support at 1823 and some resistance at 1842. I would expect to see 1823 before 1842 is seen as a test of support and then a test of resistance is the most likely scenario.

The tension is mounting as the first week of earnings reports are now over and the end result was slightly disappointing. The bulls still have the rest of the month (9 trading days) left to pull the "rabbit out of the hat" with hopes that the strong stocks in the DOW and the NASDAQ will report earnings better than expected. Nonetheless, hopes may be fading as the earnings in the SPX stocks this past week did not accomplish new buying interest.

This coming week is all about earnings as the economic calendar has no reports of consequence scheduled. The DOW will be the index "on the hot seat" this week with reports due out on several of its strong stocks, led by IBM on Tuesday afternoon. The probabilities do not favor any "blockbuster" earnings as companies have just about squeezed all the cost-cutting measures possible and with sales failing to increase indicatively recently, it is not likely that there will be many positive surprises. In addition, many stocks are now overbought and with very high PE ratios that do not support higher prices even if earnings last quarter are reported better than expected.

The 2 big questions right now are likely to be "1) will there be a catalyst or will buying simply dry up and 2) at what price point will the sellers start overcoming the buyers?" The answers to those questions will likely be found sometime over the next 9 trading days.