DOW Friday closing price - 16452

The DOW had an inside week, meaning that based on the action throughout the week and the close on Friday nothing of consequence was decided in either direction. Nonetheless, the bulls were in control most of the week and they came within 4 points early in the day on Friday of getting above the previous week's high but the end result was a failure and that could be meaningful as the bulls have now failed on 5 occasions during the past 3 months and as the number of failures increase so do the probabilities of a downward resolution occurring.

The DOW had a negative reversal day on Friday, having made a new 9-day high and breaking above a minor previous high at 16369 and then closing in the red and on the lows of the day, suggesting the first course of action for the week will be to the downside. The action has to be considered a negative since the index did get above the most recent high weekly close at 16452 (got up on Friday to 16456) but the bulls were unable to keep the index going higher, even intra-week above the previous week's high at 16460. It should be stated that the previouis weekly close at 16452 was a successful retest of the 16478 all-time high weekly close, meaning that a break above that level would be a signal the uptrend is resuming, while a failure to close above that level means the bulls still need new fundamental positives to generate new buying interest.

On a weekly closing basis, there is decent resistance at 16452 and strong resistance at 16478. On a daily closing basis, there is minor resistance at 16336, decent at 16452 and strong at 16576. On a weekly closing basis, support is minor at 16065 and 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 very minor support at 16222, minor to perhaps decent at 16065, minor again at 16027 and at 16040, minor again at 15821 and minor to decent at 15739.

The bulls were in control of the DOW this past week with 3 green closes and a rally of 390 points to the upside from the lows to the highs of the week. Nonetheless, when "push came to shove" the bulls were unable to make it happen in spite of the fact that the few economic reports that did come out last week were better than expected. The bulls are now in a fragile situation having repeatedly tested the all-time over the past 3 months without any success in re-stimulating the uptrend that has been in existence for the past 29 months.

The uneventful trading range in the DOW continues to shrink with 16452 to the upside and 16065 to the downside, both based on a daily and weekly closing basis. With the index closing at the general support/resistance area at 16300 and with quite a few economic reports due out this week (20-city Case Schiller, Consumer Confidence, Durable Goods, GDP 3rd Estimate, Personal Income and Spending, and Michigan Sentiment), the probabilities have now increased that some decision will be made.

To the upside, the DOW will show resistance at 16369, at 16456, and at 16505. To the downside, the index will show support at 16240, at 16126 and at 16046.

Having closed on the lows of the day on Friday, the DOW is likely to head lower on Monday with 16240 as the immediate downside objective. If broken, the 200 60-minute MA, currently at 16225, will be tested once more. That line has not been broken convincingly, or for more than 2 hours, for the past 25 days, meaning that it is likely to be an important pivot point this week.

The probabilities slightly favor the bears in the DOW if for no other reason than 3 months of failure to re-generate the uptrend. Nonetheless, the bulls have not yet given up and with so many economic reports due out this week, any of which could be used as a catalyst, the decision on whether the support or resistance levels will be broken is far from made.

NASDAQ Friday closing price - 4276

The NASDAQ did not follow through on the previous week's weak close on the lows of the week, having generated an inside week as well as a green close. The inability to follow through to the downside, as well as a failure to break above the previous weeks' high, leaves the traders unsure of what to expect this week. Nonetheless, the index did generate a negative reversal day on Friday (higher highs and a close below the previous days' low) as well as a high probability that the all-time high at 4371 has now been tested twice successfully on the daily chart, meaning that slowly and possibly surely, a top formation is being formed, much like what has already been formed in the DOW.

The NASDAQ did close on the lows of the day/week on Friday and further downside below last week's low at 4268 is expected to be seen with the strongly pivotal support double low at 4239/4241 as the downside objective.

On a weekly closing basis, minor to perhaps now decent resistance is found at 4336. Above that level, 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, very minor resistance is found at 4318/4319, minor resistance is found at 4333 and decent resistance is found at 4357. On a weekly closing basis, support is minor but likely indicative at 4245, 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 very minor at 4277, minor to perhaps decent as well as indicative at 4245, minor to perhaps decent again at 4113, minor at 4051 and decent at 3996/3998.

The NASDAQ has now been without making a new high for the past 3 weeks but that is not yet indicative as the index over the past year has twice been without making a new high for a longer period of time (in June for 7 weeks and in August for 5 weeks). By the same token, there have been 3 occasions this past year where the index had built a double low (much likely seen now at 4239/4241) and every single time that double low got broken. The last time was in January were a double low at 4103/4097 got broken and took the index down to test the 100-day MA, which is now currently at 4127. With the index closing on the lows of the day/week and further downside likely to be seen on Monday, the probabilities have now increased that the 4239/4241 level will get broken and a drop down to the 100-day MA seen.

It should also be mentioned that the chart of the NASDAQ is now beginning to show that the 4239/4246 area is becoming a very important pivot point level as it was also the previous 14-year high made in January. A break of that level, especially on a closing basis, will not only be considered a break of support but will also give a failure-to-follow-through signal on all charts. That situation has occurred only once this past 52 weeks and that was during the previous 7% correction seen in January, meaning that if the correction is duplicated this time around, that a stronger correction is likely to occur, perhaps like what was seen in July 2011 when a 20% correction was seen after the initial 10% correction and new high occurred.

To the upside, the NASDAQ will show resistance at 4344, at 4354, and at 4371. To the downside, the index shows support at 4239/4242, very minor at 4226, and then nothing until 4097/4103. A break below 4097/4103 will likely be very indicative as it would mean a break of the 100-day MA, currently at 4120, and that hasn't happened over the past 15 months. It should be mentioned that on the weekly chart, the index does not show any support below 4239 until 4097 is reached and even then the support there on the weekly chart is minor.

The NASDAQ has been the leader to the upside during the past few years but the index is now showing some topping out action that includes several of its main stocks that had not shown topping action before (GOOG, PCLN, and NFLX) doing the same. Though neither the index nor the stocks mentioned have yet to give any kind of a sell signal, all of them are in a position to do so this week if further downside is seen.

It is clearly evident that 4239/4241 is an important pivot point that if broken will likely cause the index to fall at least another 140 points to the downside. By the same token, to the upside the 4371 level is now considered a pivotal resistance that if broken would also re-generate the uptrend. Probabilities slightly favor the bears if for no other reason than the inability to continue the uptrend recently, when no resistance was found above.

SPX Friday closing price - 1866

The SPX failed to follow through to the downside after the previous week's close on the lows of the week. In addition, it was the only index that actually rallied above the previous week's high as well as made a new all-time high, though just by a minute amount (1883.57 vs 1883.97). The index now seems to be taking the role as leader as it has recently outperformed the other indexes with several of its stocks making either a multi-year high (BAC) or a new all-time high (JPM).

On a possible negative note, the SPX is likely now showing a double top at 1883 on the daily chart, if and when the index gets below Thursday's low at 1863 on Monday. The double top will not have the same strength it normally would have since on the weekly chart the index has been up to 1883, 1882, and 1883 over the past 3 weeks, so a possible multiple top area may now be in place and therefore likely to be broken at some point. By the same token, for now it is evident the index has built what can be considered a strong resistance level, especially if the bears can take the index below last week's low at 1842, as well as below the low seen the last 3 weeks at 1834.

On a weekly closing basis, there is minor to perhaps decent resistance at 1878. On a daily closing basis, there minor resistance at 1872 and decent at 1878. On a weekly closing basis, there is minor support at 1841, 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 at 1860, decent at 1841, and very minor between 1826 and 1828. Below that level, there is minor to decent support at 1819, minor support at 1805 and then decent support at 1775.

The SPX closed in the upper half of the week's trading range and with the possible triple top at 1882/1883, the index has a chance to make a new all-time high this coming week. By the same token, the first course of business for the week is likely to be to the downside since the index did close on the lows of the day on Friday, suggesting that a drop down to the previous low at 1850 seen on Wednesday, which is also the previous all-time high seen in January, will be seen. The 1850 level seems to be pivotal this coming week, though in reality the level that needs to be watched is 1842 and then 1834. A break of those 2 levels will put the bulls on the defensive and looking for a drop down to the 100-day MA, currently at 1815, which is also where a minor intra-week low is found. A break of 1815 will likely generate a drop down to 1775 and 108 points below the high of the move, making it very difficult for the bulls to recover to make new high.

To the upside, the SPX will show resistance at 1876 and at 1833 and to the downside, the index will show support at 1850, at 1842, and at 1834.

It is weird that the SPX is now the leader to the upside, having replaced the NASDAQ which up to just a couple of weeks ago was the leader and for a long time. The shift of leadership could be temporary but for this coming week all eyes will be on the SPX, especially since on Friday after the close the yearly stress tests on the banks came out, meaning that there could be some reaction to those reports on Monday.

It is evident that the 1883 level is now important resistance in the SPX that if broken would likely take the index up to the 1897-1900 level. By the same token, a break below 1834 is now likely indicative that a top has been found. Probabilities slightly favor the bulls at this time.

SPX now seems to be suggesting that further upside will be seen while the other 2 indexes area saying the opposite. By the same token, the positive signal given by the SPX is not as convincing as the negative signals being given by the other 2 indexes, suggesting the probabilities favor the downside this week. By the same token, none of the indexes have given any "clear-cut" signal in any direction, likely meaning the traders will wait for the plethora of economic reports due out this week.

On Tuesday, the 20-city Case/Schiller and Consumer Confidence reports come out, on Wednesday Durable Goods are reported, on Thursday the 3rd estimate of GDP and the weekly Initial Claims reports are given, and on Friday Personal Income and Spending, as well as the Michigan Sentiment reports are shown. None of these reports are likely catalytic by themselves but with the indexes in a pivotal situation, if the overall outlook is bullish, the bulls will likely take advantage and rally the indexes. By the same token, if the reports are positive and the bulls fail to rally the market, the subsequent disappointment is likely to be palpable and strong selling will likely occur.

The probabilities favor the bears slightly due to the consistent failures already seen over the past few weeks. In addition, the Chinese market is now officially in a bear status and the Russia/Ukraine situation is not likely to get better, in fact it could easily get worse, meaning that the bulls will have a tough time generating the kind of buying interest needed to make new all-time highs.