DOW Friday closing price - 17113

The DOW generated a red weekly close on Friday but no damage was done to the chart as the bulls managed to keep the weekly close above the previous all-time high weekly close seen in July at 17100. The index did close in the middle of the week's trading range, suggesting that the traders may be making a decision by the end of the week, after the ISM Index and Jobs reports come out, on what direction the index will take for the rest of the year.

The DOW did see a lot of volatility this week, having generated 3 of 5 red close days as well as seeing a drop of 405 points from the previous weeks' high. The increased volatility and trading range does increase the probabilities of a top having been found.

The DOW was once again the leader of the indexes to the upside, having dropped 1% in value whereas the other indexes dropped 1.2% and 1.5% and both closed in the lower half of the week's trading range. The continued shift of money from the other indexes to the DOW strongly suggests a flight to safety and with the end of the year approaching, it is highly unlikely that trend will change. The speculative buying fever seen earlier this year seems to have come to an end.

To the upside and on a weekly closing basis, the DOW will now show minor to perhaps decent resistance at 17137 and then decent resistance at the all-time high weekly close at 17274. On an intra-week basis though, resistance is found at 17161 and at 17226 and then nothing until the 17300-17350 area.

To the downside, the DOW now shows minor support at the 17000 demilitarized zone and pivotal support at 16937/16945. If 16937 is broken, no support is found until the 16700 level is reached. The index might be in the process of building a Head & Shoulders formation on the daily chart if the index goes above a previous day's high but does not make a new all-time high, which in turn if it happens and the index goes below 16937 would offer a 16532 objective. With the 200-day MA currently being at 16555, the downside objective is certainly viable.

The DOW is not likely to do much at the beginning of the week as the traders are likely to wait for the important economic reports at the end of the week. Nonetheless, it does need to be mentioned that last month's close was 17098 and the probabilities favor the index closing above that level on Tuesday because in 2012 when the index corrected 8% in October and November, the September close was higher than the August close.

After having seen the volatile and mostly negative action this past week, the probabilities have increased that the 17350 (17274 weekly close) is the high for the year. Such a scenario is likely to begin to be confirmed by Friday, if not by Wednesday of the following week when the FOMC rate decision is announced.

NASDAQ Friday closing price - 4512

The NASDAQ failed to follow through on the previous week's positive reversal and close near the highs of the week to close this week in the red and in the bottom half of the week's trading range. In addition, the index now shows an ominous double top at 4610, with the index having seen that high the previous week as well as 4 weeks ago, strongly suggesting that the index is now ready for a correction.

The NASDAQ continued to see selling interest this past week, having dropped 1.5% in value where the 2 indexes dropped less than 1.2% in value. The fact that scenario is occurring suggests that the speculative fever in the market seen earlier this year is no longer being seen, which in turn suggest a correction is just "around the corner".

With the exception of FB, which generated a slightly higher all-time intra-week high and close this week than last, the rest of the main stocks in the NASDAQ suffered losses and red weekly closes on Friday, also suggesting that further upside in the index will need fundamental help to generate new buying interest at this time.

To the upside and on a weekly closing basis, the NASDAQ now shows decent resistance between 4579 and 4582. On an intra-week basis, some resistance is found at 4557 and then nothing until the 4600 level. Decent resistance is found at 4610, which is now a confirmed double top on the daily chart and will be a confirmed double top on the weekly chart this coming week if the index goes below last week's low at 4466 without making a new 14-year high.

To the downside, the NASDAQ will once again show support (but minor now) at 4599/4500. Further and likely pivotal support is found at 4466 that if broken would likely cause the index to drop down to the 4339/4344 level. Decent support is now likely found at the 200-day MA, currently at 4285.

The NASDAQ closed slightly in the lower half of the week's trading range and the probabilities favor the bears. Nonetheless, the index closed on the highs of the day on Friday and the first course of action is likely to be to the upside on Monday with a target of 4546-4552.

It is unlikely the NASDAQ bulls will be able to get the index above the 200 60-minute MA, currently at 4552, and less so above the most recent high at 4557 without some fundamental help. As such, the probabilities favor the index trading for at least the next 2 days between 4500 and 4550.

Nonetheless, it does need to be mentioned that in September 2012, the NASDAQ generated a monthly close in the green before heading lower the next 2 months, meaning that last month's close at 4580 could be a target for the bulls on Tuesday September 30th. It should also be mentioned though, that any close on Tuesday below 4580 will mean September was a reversal month, with the index having generated a new 14-year high in September and then closing in the red.

It is likely that the NASDAQ will once again be the key to the overall market this week. Any close on Tuesday below 4580 will be considered a negative but a close in the lower half of the month's trading range (below 4543) would be considered even a stronger negative as it would suggest that the 4466 low seen last week will be broken and with no support below until the 4339/4344 level is reached, it would be a signal that the index has begun a correction.

SPX Friday closing price - 1982

The SPX gave a sell signal on the weekly closing chart on Friday, having closed below the most recent weekly closing low at 1985. In addition, the index also gave a failure to follow through signal, having made a new all-time high this past week but then closing in the red and below the previous all-time high weekly close made the last week in June at 1985. The close was only 3 points below both the previous low and previous high closes, which does not strongly testify that further downside will be seen, but does increase the probabilities that a top to this rally might now be in place.

The SPX did close slightly in the lower half of the week's trading range, suggesting further downside below last week's low at 1965 will be seen. With 1965 not showing previous support, if the bulls are unable to gain new buying interest this week after the important economic reports come out on Friday, the probabilities will strongly favor a top having been made at 2018 and a year-end correction starting.

To the upside, the SPX will now show some minor resistance at 1991 and at 2000 and a bit stronger at 2011. Decent resistance is found at the all-time high at 2018. To the downside, support should once again be found at 1978 but if broken, the 1965 level is likely to be seen again "and" broken with minor support then found between 1950 and 1955. The decent to strong support is found at 1904.

The SPX chart almost has to be considered the most negative or most telling of all the other indexes, inasmuch as the index made a new all-time high the previous week and yet gave it all up "and" also gave a sell signal on both the daily and weekly chart in the process. The SPX has not been the leader of the indexes but it has been the most constant over the past few years and with the kind of signals this particular index gave this week, it will be difficult for the bulls to generate new buying interest now.

Like with all the other indexes, much will depend in the SPX on what the economic reports have to say at the end of the week. Nonetheless, in this case the onus of proof is now on the shoulders of the bulls and off of the shoulders of the bears.

Volatility was king this past week and volatility favors the bears at this time. Chart patterns and action this past week have cast a pall over the market and put the indexes in a position to mimic the 8% correction seen in the October/November 2012 period.

Nonetheless, the traders are facing this week the 2 most important economic reports of the month and economically speaking, most reports have shown the economy continues to grow at a pace that does not strongly support a correction now. In addition, the following week the earnings quarter starts and the first 3 weeks of most earnings quarter have been supporting the bulls and not the bears, at least over the past 4-5 years.

The one thing that the traders are strongly worried about is the Fed announcing anything that could suggest interest rates may go higher sooner than later and the week after next on Wednesday, the FOMC minutes will be released. Traders were anticipating a change of language in the previous meeting and did not get it, causing some buying to be seen. It is unlikely that the same kind of buying will be seen this time if once again the Fed does not change the language, but if they do change the language it mostly likely will be a negative catalyst of consequence. Simply stated, the probabilities are starting to shift toward the bears.