DOW Friday closing price - 16361

The DOW made a new all-time weekly closing high on Friday at 16512 (over the previous one at 16478) but it was not a convincing new high as it was only by 34 points and the previous intra-week high at 16631 was not broken. It should be mentioned that it is now 5+ months that the trend has been mostly sideways with weekly closes at 16478, 16458, 16412, 16408 and 16512 over this period of time, spaced anywhere from 3-8 weeks between each other, suggesting that there has been no general consensus among the traders of direction for the year.

The DOW did generate a negative reversal day on Friday, having made a new 5-week high and then closing in the red and below the previous day's low, suggesting that the first course of action for the week will be to the downside. By the same token, the index is also showing a possible bullish flag formation on all charts with the flagpole being the rally from 16312 to 16620 and the flag the trading range over the past 4 days between 16486 and 16620. A break above 16620 would offer an upside objective of 16794. By the same token, if the index does generate follow through to the downside on Monday and gets below 16447, the flag will be negated.

On a weekly closing basis, there is no resistance above. On a daily closing basis, is, there is now minor to perhaps decent resistance 16572 and 16576 and decent resistance at the all-time high at 16580. On a weekly closing basis, support is very minor at 16361 and then none until decent support is found between 16026 and 16065. Below that, there is minor to perhaps decent support at 15698 and minor at 15665. On a daily closing basis, there is minor to perhaps decent support at 16361, minor between 16245 and 16264, decent between 16026 and 16065, minor support at 15821, minor to decent at 15739 and strong at 15372.

The DOW is now likely to act technically for the next 4 weeks as no earnings or economic reports of consequence are due out until June. The close in the upper half of the week's trading range, as well as the new all-time high weekly close, does suggest technically that the bulls have the upper hand and that the uptrend will resume. By the same token, the negative reversal day on Friday does suggest that a different decision could be made this week after the traders have had an opportunity to fully digest last week's economic information. In addition, the seasonal trend of "sell in May and go away" will also be considered, especially since we are now in May. Simply stated, the traders have a lot to consider this weekend before any decisions are made and the action seen at the beginning of the week could be the catalyst the traders need.

To the upside, the DOW has resistance at the all-time intra-week high at 16631. In addition, the index will show decent to perhaps strong daily close resistance between 16572 and 16580 that will need to be broken decisively before the traders do any new buying. To the downside, the 16361 level on a daily closing basis (16312 intra-week) now seems to be pivotal support, especially since a close below that level would give both a sell as well as a failure-to-follow-through signal.

There are no fundamental reports of consequence scheduled for this week, meaning that Monday's technical action will likely be indicative of what the indexes will do the rest of the week. Probabilities slightly favor the bulls but the key word is "slightly".

NASDAQ Friday closing price - 4123

The NASDAQ gave signs that the recent short-term downtrend may be over and that a rally to retest the 14-year high at 4371 might be forthcoming. The index generated a new 4-week weekly closing high and in the process might have successfully tested the recent 20-week low at 3946 with a drop down to 4014 (which was below the previous week's low at 4046) and a close in the green and near the week's high. The action means that if the index goes above last week's high at 4149 the retest of the recent low will be successful and if able to get above the previous weeks' high at 4177, a short-term buy signal will be given.

It should be mentioned that 4 of the main stocks in the NASDAQ (AMZN, GOOG, NFLX, and PCLN) all had positive reversal weeks off of MA lines and/or support levels of importance and that the most important stock in the index (AAPL) made a new 31-month high this past week. The action in those stocks suggests that further upside will be seen this week and that the probabilities are now high that the index may be repeating the action seen in June 2011 when after a 10% correction was seen between May and June, the index proceeded to rally for a period of 2 weeks to come within 7 points of the previous multi-year high, before the stronger correction occurred. Just like now, the index had not previously tested the multi-year high successfully.

On a weekly closing basis, minor to perhaps decent resistance is found at 4197, very minor at 4276 and decent resistance is found at 4336. On a daily closing basis, minor to perhaps decent resistance is found at 4161, minor at 4183 and decent at 4243. Above that level, there is minor to decent resistance at 4273 and at 4333 and strong at 4357. On a weekly closing basis, support is minor at 4075 and decent at 3999/4000. Below that, there is minor support at 3919 and at 3791 and decent at 3589. On a daily closing basis, support is minor at 4074 and decent between 3996 and 3999.

The NASDAQ successfully tested the 200-day MA 14 days ago (then at 3945 now at 3980) and last Monday the index generated a successful retest of that successful retest with a low at 4014 followed by 4 higher lows in a row. The action seen this past week, especially with supporting economic reports, does suggest that the index is now ready to retrace some of the 425 point loss that occurred over the past 2 months. By the same token, the NASDAQ must now accomplish this feat mostly through technical trading as for the next 4 weeks no major economic or earnings reports are due out.

To the upside, the NASDAQ now shows 4 successful retests of the 14-year high daily close at 4357 with each one (4333, 4276, 4183, and 4161) being lower than the previous one and the last one happening a week ago last Thursday at 4161. A break above the most recent one would suggest that the short-term downtrend is over and that a rally to test the 14-year high will occur. With the index closing on Friday at 4123 the bulls only need to generate a daily close rally of 40 points above Friday's close, at some point this week, to turn the recent downtrend around.

To the downside, the NASDAQ now shows pivotal daily close support at Monday's close at 4074. A close below that level would not be a sell signal but it would be strongly disappointing and would detract from whatever upside momentum was gained this past week. Important intra-week support is found at 4046 that if broken, especially on a daily closing basis, would renew the selling interest.

The NASDAQ is now facing an important and technically pivotal week with a downside daily close at 4074 and an upside daily close at 4161 likely to determine what the index will do for the next 2-4 weeks. With the index closing on Friday at 4123 (almost in the middle of those 2 pivotal levels), it is clearly evident that the traders will be looking at the action at the beginning of the week to help them decide what direction to key on.

The probabilities slightly favor the bulls as the economic news last week was positive and the bears are unlikely to have enough strength to generate any new selling of consequence "at this time".

SPX Friday closing price - 1881

The SPX made a new all-time weekly closing high on Friday but left some questions unanswered as the all-time intra-week high at 1897 was not broken. Nonetheless, the index closed near the highs of the week and further upside above last week's high at 1891 is likely to be seen, suggesting that the 1897 level will be at least tested this week, if not broken.

The SPX had a positive reversal week, having gone below the previous week's low at 1859 (got down to 1850) and then going above the previous week's high at 1884 and closing in the green and near the highs of the week. From a purely technical perspective, the reversal off of a positive economic reports week does suggest the uptrend will resume this coming week and that a new intra-week all-time high will be made.

On a weekly closing basis, there is resistance above. On a daily closing basis, there is minor resistance at 1883 and decent to strong at 1890. On a weekly closing basis, there is minor support at 1841, decent at 1815, minor at 1805 and decent at 1775/1782. On a daily closing basis, there is minor support at 1878, decent between 1841 and 1849 and decent again at 1815. Below that, there is very minor support at 1809, minor to perhaps decent at 1780 and decent to perhaps strong at 1741.

The SPX has now generated 10 green closes out of the last 14 trading days and for this past week, each day showed a higher low than the previous day, suggesting that the bulls are fully in control at this time. The economic reports this past week did not disappoint and with no further reports of importance scheduled for another 4 weeks, the probabilities are strong that the uptrend will continue.

To the upside, the SPX shows minor resistance at 1891, especially since the index did generate a negative reversal day on Friday, as well as a close near the lows of the day. The first course of action for the week should be to the downside with Friday's low at 1878 likely to be broken on Monday but the 1872 level holding up. Nonetheless, the index did close near the highs of the week, suggesting that last week's high at 1891 will be taken out at some point this week and that the all-time intra-week high at 1897 will be tested and probably broken as well. No resistance above 1897 is found but it does bear mention that using the previous 3 all-time highs over the past 5 months at 1849, at 1881, and the last one at 1897, a 3-point line can be drawn that connects at 1915, meaning that some selling could be seen at that level should the 1897 level get broken.

To the downside, the SPX only has 1 level of intra-week support that is pivotal at 1850. With the index closing on a new all-time high weekly close at 1881 on Friday, there would need to be some compelling reason for the traders to turn bearish enough to take the index down 30+ points and break that level of support. Such a scenario does not seem probable at this time without some bearish catalyst being seen. Nonetheless, with the index generating a negative reversal day on Friday, the probabilities do suggest that the minor intra-day support at 1872, which is below Friday's low at 1878, will be the downside objective this week.

The probabilities favor the SPX continuing resuming the uptrend with 1915 as the next upside objective, likely after a brief attempt by the bears to generate some selling interest at the beginning of the week.

All the important earnings and economic reports are out and the bears failed to make a strong case that a major correction is now imminent. The economic reports this past week showed that the economy is speeding up while unemployment is being reduced, even though not yet at a pace that would suggest much higher prices will be seen.

No economic or earnings reports of importance are scheduled for this week and that likely means the traders will start trading off of charts rather than fundamental information. With new all-time weekly closing highs made in the DOW and the SPX and the NASDAQ showing clear signs that the minor correction seen recently is over, the technical picture does suggest the upside is the direction the traders will opt for at this time.

By the same token, Friday's action was far from decisive and there were some indications in the charts that the indexes will start the week to the downside, meaning that the bulls will need to stop the bears from gaining any kind of an edge at the beginning of the week. If they are successful in "dodging any bullets" the bears may throw at the beginning of the week, the indexes are likely to end up higher at the end of the week.