DOW Friday closing price - 17280

The DOW had a strong down week, based on the plunging oil market, having dropped 3.8% in value (678 points) in just 5 days of trading. The index closed on the lows of the week and further downside below last week's low at 17280 is likely to be seen.

Though the oil market was the main catalyst for the fall, the fall in the DOW was likely exacerbated by the fact the index reached a strong psychological resistance level at 18000 the previous week (got up to 17991) and was also in an extremely overbought condition, meaning that some profit taking and price consolidation were involved as well.

The DOW closed on Friday at the previous all-time high weekly close at 17270 seen in September, meaning that even though the probabilities favor further intra-week downside, the index has a decent probability of closing in the green next week. A close next Friday above 17280 would be a successful retest of the previous high close and would give the bulls ammunition with which to attempt to continue the uptrend, while a close below 17279 next Friday would be seen as a failure to follow through signal, which in turn might generate a further and stronger correction than already seen.

To the downside, the DOW does not show any intra-week support until the 17000 demilitarized zone is reached. Further but somewhat minor intra-week support is found at the 16700 level. Decent intra-week support is found at 16333. On a daily closing basis though, minor to decent support is found at the 200-day MA, currently at 16865.

To the upside, the DOW does not show any intra-week resistance until minor resistance is found at 17705. Decent intra-week resistance is found at 17894 and strong at the all-time high at 17991.

Based on the chart, the probabilities favor the DOW continuing lower with the 17000 demilitarized zone as its first objective. Nonetheless, if oil prices continue lower (good possibility), the chart seems to suggest that a drop down to the 16333 level will be seen before any recovery in price occurs. Such a drop would be considered a correction of consequence since it will mean the index will have dropped 10% in value.

It should also be mentioned that if the DOW does generate a red close next Friday, and/or drops as strongly this week as it did last week, the 17350 level will become decent resistance and will likely mean no new highs will be seen the rest of the year.

With everything being dependent on the price of oil, it is impossible to speculate with any degree of accuracy of what will happen this week in the DOW.

NASDAQ Friday closing price - 4653

The NASDAQ fell 2.7% in price this past week due to the falling crude oil market but the index underperformed the other indexes to the downside, having dropped less in value than the DOW at 3.8% and the SPX at 3.7%, which in turn suggests that the drop in price is temporary as the traders are still leaning toward supporting tech sector stocks over all others.

The NASDAQ did close on the lows of the week and further downside below last week's low at 4653 is likely to be seen this week. Nonetheless, with the previous 14-year high weekly close at 4582 still 71 points lower and unlikely to get broken this week unless the entire market takes another "big" fall, it does suggest that the fall being seen is only a correction to test the previous high weekly close and not the beginning of a downtrend.

To the upside, the NASDAQ shows minor resistance between 4702 and 4709 which represents the 200 60-minute MA (currently at 4702), Friday's high at 4707, and a previous minor intra-week high from November 18th at 4709. Further resistance is found at 4759 is reached and a bit stronger at 4788. Strong resistance is found at the 14-year high at 4810.

To the downside, the NASDAQ shows minor support at 4653 and then nothing until minor support is found between 4600 and 4606. Further support is found at 4594 but reaching that level will make the "third" gap between 4575 and 4594 a magnet to be closed. Nonetheless, on a daily and weekly closing basis, support will be found between 4582 and 4592 that is pivotal for the longer term and not likely to get broken unless the oil market has generated such strong selling that the uptrend is broken.

Probabilities favor the NASDAQ heading lower this week with the 4600 level as the likely objective. Nonetheless, the index has still been the one with the higher buying interest, meaning that if oil prices do not continue to push the market down, the index will likely be the one to continue to lead the way upward.

SPX Friday closing price - 2002

The SPX had a strong spike down week and a close on the lows of the week, suggesting further downside below last week's low at 2002 is likely to be seen. In addition, the index was the one that did the most damage to the chart as it was the only index that closed on Friday below the previous all-time high daily close at 2011, as well as below the previous all-time high weekly close at 2010. Follow through to the downside on a closing basis on Monday would be a decent negative and even a stronger negative if the same happens next Friday.

The SPX finds itself at the 2000 level that has to be considered an important psychological support level that if broken convincingly would likely stimulate thoughts that the top of the uptrend was made with the 2079 high seen the previous week.

To the upside, the SPX will now show minor resistance at 2019, very minor resistance at 2025, and minor but possibly pivotal at 2047, which is where the 200 60-minute MA is currently located. Further resistance is found at 2057 and then nothing until last week's high at 2075.

To the downside, the SPX will show minor but likely short-term pivotal support at 2000 and then nothing until minor support again at 1979. Below 1979 there is no support until the 200-day MA, currently at 1947 is reached. Stronger support is found at 1904 and the strong and extremely pivotal support at 1820.

The SPX is likely to be the index the traders watch the most this week since the 2000 level represents a highly important psychological area. A close below the 2000 level, especially on a weekly closing basis, would suggest the index will drop down to the August spike low at 1904.

Based on the chart alone, the probabilities favor the bears but then again everything is dependent on what the oil market does.

The market turned negative this past week based on oil prices taking a strong fall in price. By the same token, the fall in price was also likely exacerbated by the fact the indexes were near upside objectives and in an extremely overbought condition, suggesting the strong selling was as much profit taking as it was selling based on lower oil prices.

The oil market is likely to continue lower since the Saudi's this weekend stated they would not cut production even if the price got as low as $40 (oil prices closed at 57.98 on Friday), meaning that further selling pressure is likely to be seen this week, especially since the charts suggest the indexes are in a correction likely to be as much as 10% (correction so far has been only 4%).

With falling oil prices dominating the thoughts of the traders, it is unlikely that any of the economic reports this week will make any positive difference. In fact, the FOMC rate decision is on Wednesday and there is a higher likelihood of a negative coming out of the meeting than a positive, due to the continuing improving economic data seen recently.

Probability favors another strong down week unless there is some statement about oil production cutbacks from OPEC (unlikely).