DOW Friday closing price - 17279

The DOW made a new all-time high this past week, having rallied 399 points from 16951 to the high seen on Friday at 17350 and breaking convincingly above the previous all-time high at 17160. The index closed on the highs of the week and further upside above last week's high is likely to be seen. There is no resistance above but on a weekly closing basis the stock did close below a "general" weekly close resistance at 17300, suggesting the index may go higher intra-week but is not likely to close substantially higher next Friday and may even close in the red.

On a possible negative note, the DOW has outperformed all other indexes the past 2 weeks and that could be a sign that the overall market may be getting ready to correct, inasmuch as the money is flowing into the safety of Blue Chip stocks rather than to speculative ones. By the same token, the fact that buying interest continues in the overall market does suggest that what may be coming is a year-end correction, much like the 8% correction seen in October/November 2012, and not a top to the overall trend.

The DOW did close near the lows of the day on Friday, suggesting the first course of action on Monday will be to the downside, likely with the objective of testing the previous all-time intra-week high at 17160 as well as the previous all-time daily close at 17137.

To the upside, the DOW has no resistance other than the 17300 general resistance that is found 300 points above any major psychological area such as 17000 is. The "general" resistance usually applies more on a daily and weekly closing basis than on an intra-day or intra-week basis. To the downside, the DOW will now show daily and weekly close support at the previous high daily and weekly close at 17137. Further and now pivotal intra-week support is found at 16937 that if broken would signal that a top to this rally has been found.

The DOW is likely to trade down to the 17137 level at some point this week and having had a 399 point trading range last week does suggest the index could get as high as 17536 this week. Nonetheless, it is unlikely the trading range will be duplicated since the rally this past week was mostly caused by the surprise (to some traders) that the Fed did not change the language of the FOMC meeting results. It was expected the Fed would start deleting some of their Dovish low-interest-scenario-for-a-long-period-of-time language. That did not happen and it was like a "sigh of relief" to some of the bulls, causing the new buying to be seen. There are no economic reports or Fed announcements scheduled this week that could duplicate that bullish boost.

It is getting more and more likely as the month progresses, that the DOW may be mimicking the September-November 2012 action, meaning the index will close in the upper half of the month trading range, likely see a small rally above the month's high in the first week of October, and then head lower for the following 4-6 weeks in a corrective fashion. The probabilities of some year-end profit and coming from the 10% increase in value of the index has seen this past year should be considered probable. It is unlikely the traders will wait until December to make that happen so the October/November period is the most likely.

Expect the DOW to start showing some volatility this coming week and a lot of red being seen (some green as well though).

NASDAQ Friday closing price - 4579

The NASDAQ generated a positive reversal week, having gone below the previous week's low and then above the previous week's high and closing in the green and near the highs of the week, which suggests further upside above last week's high at 4610 will be seen this week. Nonetheless, the index had a negative reversal day on Friday, having gone above Thursday's high at 4593 and then below Thursday's low at 4572 and then closing in the red 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 below Friday's low at 4563. In addition, the 4610 high seen on Friday saw a lot of selling come in and will become a double top if Friday's low at 4563 is broken on Monday and a double top on the weekly chart if last week's low at 4499 is broken this week as well. The dichotomy of both of these actions does create an atmosphere of caution, especially when considering the price levels reached this past week and the action seen thereafter.

The failure of the NASDAQ to lead the rally or make new multi-year highs the past 2 weeks is another reason to be cautious as this has been the index that has pulled the other indexes up all year and if the money is leaving the index and going elsewhere, like to Blue Chip stocks, it could mean that an end of the year correction is forthcoming and will begin within the next few weeks.

The NASDAQ was not held back by its main stocks as GOOG and FB made new all-time weekly closing highs, AAPL stayed above its previous all-time high, and AMZN rallied from its lows. Only NFLX and PCLN had any kind of a negative week but then again not so negative as to affect the index all that much. As such, it must be assumed that the lack of leadership this week was mostly because of the bulk of the stocks in the index and not the leaders of the index.

To the upside and on a weekly closing basis, the NASDAQ shows very minor resistance at 4582 and then no resistance until 4963 is reached. On a daily closing basis, resistance is found at 4591, at 4592, at 4593 and at 4598. The all-time high weekly close is at 5048. On a monthly closing basis though, the all-time high monthly close is at 4696. To the downside, the NASDAQ will once again show support between 4546 and 4542 and then decent and likely pivotal show support between 4495 and 4495.

The NASDAQ continues to be the key to the market as speculative buying interest should be centered on the index if the entire market is heading higher. By the same token, if money is being shifted from the NASDAQ to the other indexes, it likely means the traders are expecting a correction before the end of the year.

The NASDAQ remains the only index with a clear "and nearby" monthly close objective to the upside at 4696. If the bulls are unable to make it happen in the next 7 trading days, they are likely to give up that objective for the rest of the year, meaning the index must make new highs above 4610 this week and the sooner the better. The index is likely to head lower on Monday with the 4642/4646 level of support as the objective. If that level holds up or is not reached and the index begins to rally and gets above Friday's high at 4610, the buying will likely become automatic with the 4696 level as the objective to be reached by Tuesday of the following week.

The bulls in the NASDAQ will have to accomplish this goal without help of as the only economic reports of consequence are not due out until Thursday and Friday. Simply stated, the action the first 3 days of the week will be critical and all technically oriented.

The probabilities are not favorable to either side.

SPX Friday closing price - 2010

The SPX made a new all-time high weekly close on Friday, closing 3 points above the previous all-time high weekly close at 2007. By the same token, the index had a negative reversal day on Friday, having made a new all-time intra-week high at 2018 and then closing in the red and near the lows of the day, suggesting the first course of action for the week will be to the downside and below Friday's low at 2006.

On a strong positive note, the SPX did generate a successful retest of the previous all-time high daily and weekly close at 1987 and 1985 respectively with a close the previous Friday at 1985, followed by green closes on the daily and weekly chart, suggesting the uptrend has "resumed". In addition, the SPX had a positive reversal week, having gone below the previous week's low at 1980 (had a low last week at 1978) and then closing near the highs of the week, suggesting further upside above 2018 will be seen this week.

To the upside, the SPX shows no resistance levels above. Nonetheless, general daily and weekly close resistance should be found around the 2030 level. To the downside, Friday's low at 1978 should now be considered minor to perhaps decent intra-week support, but on a closing basis, the 1985 level on a daily and weekly closing basis remains decent support. Further but minor support is found at 1950 and then decent to perhaps indicative and pivotal support at 1904.

The SPX has been mostly a follower and not a leader, first following the NASDAQ and now the DOW. As such, what the index does is not going to be seen with great importance unless an important support level breaks and right now that is over 100 points below at 1904.

The SPX has now established a beachhead above the strong psychological 2000 level, meaning the probabilities favor the bulls and further upside.

Once again there are mixed signals from the index charts with the NASDAQ now leaning toward the downside while the DOW and SPX are now strongly leaning to the upside. The mixed signals are not confidence builders for the bulls and add to that the fact that buying interest is now trending toward the safety of Blue Chip stocks, does suggest the indexes are in the "process" of building a short-term top from where a year-end correction can occur.

This coming week there are only 2 economic reports of consequence with Durable Goods coming out on Thursday and the 3rd estimate of GDP coming out on Friday. It is not likely that either of these reports will be catalytic as it is quite evident that traders are relying more on what the Fed says than on any economic reports. The Fed is not scheduled to deliver any information this week.

The market seems to be rallying without a lot of confidence but the bears still need some catalyst to occur in order to gain an edge. That catalyst could be as simple as a failure to continue higher for a period of days but it is evident that something needs to happen in order to generate some profit taking. It is possible and perhaps even likely that the indexes are mimicking the end of the year action seen in 2012 and if that is true then the indexes will likely head lower the first or second week of October, right after the earnings reports start coming out. Earnings reports on the main market stocks can certainly be considered catalytic, especially if worse than expected as better than expected earnings are what has been generally expected during the past few years.