DOW Friday closing price - 16321

The DOW invalidated all negative signals given over the past 6 weeks, closing above the original daily close break point at 16257 on Thursday that caused the original sell signal to be given. The index closed near the highs of the week, suggesting further upside will be seen this week with the all-time high at 16588 as the objective.

The DOW was the leader of the indexes to the upside this past week, having gone up 1.6% versus the other 2 indexes at 1.2%. It is likely the leadership was mostly a catch-up mode as it has been the laggard over the past few months. With all indexes now seemingly "in harmony" that higher prices will be seen, the DOW is the one that offers the best "bargain" buying opportunities as it can be considered that its stocks have been not generally participated in the rally the last 2 months.

On a weekly closing basis, there is decent to strong resistance at 16458/16478. On a daily closing basis, there is minor to perhaps decent resistance at 16481 and at 16530, and decent to strong resistance at 16576. On a weekly closing basis, support is 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 at 16027 and at 16040, minor again at 15821 and minor to decent at 15739.

The DOW broke out of a bullish flag formation on Monday that offers an objective of 16587, meaning that if fulfilled the index will be testing the all-time high at 16588 this coming week. By the same token, the flag breakout was not a classic one as no new flagpole was generated, meaning that reaching the objective is not as probable as it would normally be. The flag formation does have some strict guidelines that if not met would weaken the breakout, meaning the bulls cannot falter at all before reaching the objective and must make sure that there are no lower lows than the previous day's lows before 16587 is reached.

To the upside, the DOW has no resistance until 16505-16520 is reached. The index should be reaching that level no later than Tuesday, if not done on Monday. A break above 16520 should set up a rally to the 16588 level though a bit of resistance will be found at 16562. A break above 16588 should result in a rally up to the general resistance that will be found at 16700.

To the downside, the DOW will show support at the 16240 level, which was the previous low that when broken caused the sell signal to be given 6 weeks ago. Further support is found at 16155, which is where the 50-day MA is currently at, but is also where a failure signal for the flag formation would be given if broken. As such, the 16155 level is probably the most important level of support for this coming week. Further support will be found at the 16000 demilitarized zone.

The bulls in the DOW are committed to making new all-time highs and join the other indexes in making a clear statement for the rest of the year as nothing less can be allowed at this time after the negation of the sell signal and the new highs by the other indexes. By the same token, the bulls have chosen the most difficult week of the month to attempt the new highs as this week will be mostly dependent on news and not necessarily on charts, with the ISM Index due out on Monday and the Jobs report on Friday.

The ISM index report comes out Monday at 10:00am and it is likely to set the tone for the day if not the week. Probabilities favor the report coming in as or better than expected, meaning the bulls will have the additional help they need to rally the DOW. If that is the case, expect the index to rally up to the 16500 level on Monday.

The DOW will be mostly dependent on how the traders interpret the economic reports, but the probabilities do favor the upside.

NASDAQ Friday closing price - 4308

The NASDAQ confirmed the previous week's break above the 2000 high weekly close at 4246 with a second green close above that level on Friday. In addition, the index got above and closed above the January 2000 high at 4303 that could also be considered a general resistance level, suggesting that the index is likely to continue higher with the all-time high at 5132 as the objective.

Nonetheless, the NASDAQ showed the first sign of selling or profit taking interest inasmuch as on Friday the index sold off 67 points from the high of the day and finished closing out the day with a negative reversal as a new 14-year high was made and a red daily close occurred. In addition, the index closed out the day and the week in the middle of the week's trading range, suggesting the traders will be closely monitoring the ISM index report on Monday to determine which direction to take the index the rest of the week.

On a weekly closing basis, decent to perhaps strong resistance is found at 4963 and major is found at the all-time high at 5048. On a daily closing basis, there is very minor resistance at 4318. Above that level there is no resistance for the past 12 months. 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 at 4237, minor to perhaps decent at 4113, minor at 4051 and decent at 3996/3998.

The NASDAQ has now closed in the green the last 4 weeks and into a new 14-year intra-week high for the last 5 days, suggesting that further upside is likely to be seen. Nonetheless, volatility started to be seen on Friday when the index almost covered the entire trading range for the week in 1 day as a new high was made and then fell within 3 points of the week's low that had made on Monday. Volatility is the first sign of a top being formed and though volatility on just 1 day is not significant, but if it continues to be seen this coming week it could be a sign that the traders are having trouble generating new buying interest at these prices.

In January of the year 2000, when the NASDAQ was on a meteoric run to the all-time high at 5132, the index made a high at 4303 and then over a period of just 1 week fell to 3743 before the buying resumed. Friday's action was a sign that something like that could be seen at this time as the index fell 67 points in just 2 hours. The fact the index got above the high seen in January 2000 does suggest that the uptrend is likely to continue over the "mid-term" as it is clearly evident that the economy is not likely to deteriorate much more or at a faster rate (if at all) than what has been seen so far. Nonetheless, the index is overbought (has rallied 374 points in 4 weeks) and if the traders see any kind of inability to go further to the upside, a profit taking binge could occur that could cause the index to fall 500-600 points in a flash. Such a drop would likely be used to purchase anew as all signs point to the index "ultimately" trying to make a new all-time high.

Just for information (not necessarily indicative of what the index will do this week), it does need to be mentioned that the NASDAQ is presently on the same kind of a run as was seen back between November 1998 and March 2000 (Dot.com era) when the index after breaking above the 50-week MA ran for a period of 70 weeks before finding a top and 75 weeks before touching the MA again. The NASDAQ has now run for 61 weeks since the 50-week MA was last touched and if past action is to be imitated, the index will find a top within the next few weeks and fall to the 50-week MA that is presently at 3735.

It also needs to be mentioned that the original Dot-com Era run started from a low weekly close of 1498 and went up to a high weekly close at 5048 (3550 points). This run started at a weekly closing price of 1377 and that means that Friday's close at 4308 is already 2931 points, suggesting that on a weekly closing basis the index could run another 619 points to 4927 if the Dot-com Era is to be mimicked.

It is evident that much of what the index will do this week will be decided on Monday after the ISM Index report comes. There are basically 2 scenarios that are possible with 1) the index taking a fast dive down toward the 3700 level before resuming the uptrend or 2) the index getting a boost from the report and heading higher with 4927 as the high weekly close objective, to be reached within the next 9 weeks.

The level to be watched this week in the NASDAQ is the 4243/4246 area on a daily closing basis. A close any day below that level would suggest that the #1 scenario mentioned above will likely occur. Otherwise, the probabilities continue to favor the bulls.

SPX Friday closing price - 1859

The SPX made a new all-time high this past week, getting above the previous high at 1850 and then closing near the highs of the week, suggesting further upside will be seen this coming week. With no resistance above, the index could continue on to the 1900 psychological resistance before encountering any new selling.

The SPX was expected to make a new high since the previous high area was littered with multiple intra-week highs between 1848 and 1850 and multiple highs are generally broken. As such, the possibility of a top being made now is likely higher than it has been during the previous 10 weeks. Nonetheless, with all indexes likely to go higher the probabilities do not favor a top being found this week unless there is a fundamental negative that comes out in the important economic reports due out this week.

On a weekly closing basis, there is no resistance above. On a daily closing basis, there is no resistance above. On a weekly closing basis, there is 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 but likely indicative between 1845 and 1848, minor again between 1826 and 1828, and minor to decent at 1819. Below that level, there is minor support at 1805 and then decent support at 1775.

The SPX has no resistance above but back in 2007 the index broke above a previous all-time high at 1552 and 2 weeks later after reaching 1576 (24 points higher) the index topped out and embarked on a downtrend that lasted 2 years. There are no chart reasons to believe that will happen this time again, as there were no chart reasons to think it would happen in 2007 but it is interesting to note that the most important economic reports for the month are due out this week and that could cause the traders to start taking profits should the reports signal that the economy is no longer improving.

As far as the downside is concerned, the previous high weekly close at 1842 should not be broken if the SPX is heading higher and a weekly or even a daily close below 1828 would now give a failure to follow through signal that would likely be aggressively followed by the traders. Probabilities favor further upside but much will likely be dependent on how the economic reports this week are evaluated by the traders.

The indexes now seem to be on the same page as no mixed signals were given this past week. All indexes participated fully this past week in breaking and/or confirming previous levels of resistance that were of concern to the bulls. The only concern left at this moment are the important economic reports that are due out this week with the ISM Index on Monday at 10:00am and the Jobs Report on Friday. No close-by chart resistance levels are present, meaning that only fundamental issues could derail further upside from being made.

By the same token, the scenario outlined above does create a "commitment" to higher prices should the economic reports not be considered a negative, meaning that the traders will now be looking closely at failures rather than gains (the downside rather than the upside) to measure whether last week's breakout was real or fake. Probabilities favor the bulls as the bears failed at levels that needed to be defended.