DOW Friday closing price - 17823

The DOW generated a positive reversal week, having gone below the previous week's low at 17238 (saw a low at 17210) and then above the previous week's high at 17900 and then closing in the green near the highs of the week, suggesting further upside above last week's high at 17914 will be seen this week. The action seen was almost a carbon copy of the action seen last year in December when the index made a high at 17958, proceeded to generate a strong down week to 17280 and then reversed (after a drop to 17067) to close at 17804.

With only a difference of 143 points to the downside this year (on the follow through to the downside) and only a difference of only 14 points to the upside (on the high achieved prior to the drop), as well as only a difference of 19 points on the close of the rally week, the action in the DOW is eerily similar and could be construed as something the traders could have mimicked "technically" as there was no change in the fundamental picture to have caused the rally last week to occur.

Nonetheless, the DOW should see some follow through this coming week and considering last year's rally up to 18103 that generated an additional green weekly close at 18053, it is possible that same chart action/objective will be seen once again, especially given that the fundamentals still favor some sell off occurring if the Fed raises interest rates in December. By the same token, the momentum is presently in favor of the bulls for at least 1 more up week. In addition, it should also be mentioned that last year rally to 18103 was followed up with 3 red close weeks in a row, as well as 6-week downtrend that took the index back down to 17037 before the uptrend was actually renewed.

To the upside, and on an intra-week basis, the DOW will show resistance at 17991 and at 18103. Above that levels, there is resistance at 18133, at 18288, and at the all-time high at 18351. Based on what happened last year, a break above 18133 would likely trigger further upside but a failure would likely trigger the same kind of down movement as seen last year.

To the downside and on an intra-week basis, the DOW shows minor support at 17667 and decent as well as pivotal support at 17579 that includes the 200-day MA, currently at 17590. Below that level there is no support until last week's low at 17210 is reached.

The traders in the DOW seem to be trading the index purely technically and using last year's action as the framework for support/resistance levels to be used, given there isn't much to trade off of fundamentally until the Fed decides what to do in the next Fed meeting in December. It is certainly unlikely that a new all-time high will be made before that announcement is made, meaning that the action seen last year could be duplicated once again, at least as far as what could happen in the next 4 weeks. It is evident that volatility will continue to be seen as the future offers quite a few possible scenarios and given that the index has generated 2 weeks in a row of 600+ point moves and that there is a "mountain" of strong resistance above the 18000 level, it would seem logical to assume that the path to the downside (down to the 17210 level) will be easier to accomplish over the next 4 weeks that any rallies above 18100.

Probabilities favor the bulls in the DOW this week but with "limited" success.

NASDAQ Friday closing price - 5104

The NASDAQ also generated a positive reversal week, having made a new 4-week low at 4908 and then reversing to close in the green and on the highs of the week, suggesting further upside above last week's high at 5112 will be seen this week. Nonetheless, the reversal was not especially meaningful, given that the index has traded 29 out of the last 39 weeks between 4825 and 5164 and 12 of those weeks were within the 4888 and 5119 area, suggesting that the action last week was mostly technical in nature, within a sideways market.

The NASDAQ continues to be the index that hosts the leaders of the market, inasmuch as AMZN, GOOG, and NFLX all made new all-time weekly closing highs on Friday, which can be considered both a positive and a negative, given that further upside "of consequence" in those stocks get more difficult to accomplish as each day goes by.

Even though the NASDAQ generated a strong reversal week that included a rally of 204 points from low to high, it should be remembered that just 3 weeks ago the index was on a tear to the upside after 6 weeks of green closes and a rally of 667 points and had closed on the highs of the week, suggesting further upside would be seen. Nonetheless, without any negative catalyst to prevent further upside, the index promptly fell 255 points over a period of 2 weeks, suggesting that the recent highs are not going to be easy to break without some tangible positive fundamental change, which is not likely to be seen at this time.

To the upside and on an intra-week basis, the NASDAQ will show minor to decent resistance at 5119 and decent resistance at 5163/5164. Above that level, strong resistance is found at the all-time high at 5231.

To the downside and on an intra-week basis, the NASDAQ shows very minor support at 5053 and at 5025, decent at the 5000 demilitarized zone (4997-5003), minor again at 4974 and then decent at between 4901 and 4908.

The NASDAQ is showing decent resistance at the 5163/5164 that the bulls were unable to break above 3 weeks ago. There is no fundamental or chart reason at this time to believe that level will be broken before the Fed announces their decision in December, meaning that the index is not likely to generate more than a 60 point rally this coming week, and probably less. With the index averaging 193 point trading ranges for the past 19 weeks and the shortest week having been 86 points 4 weeks ago, it does suggest that over the next 4 weeks (until the Fed decision) that there is a lot more to be had to the downside than the upside.

The most probable scenario for the NASDAQ this coming week is for the stock to rally and close out the week (next Friday) around the 5127/5128 level and then get into a short-term downtrend that would take the index back down to the 200-day MA, currently at 4965 before the Fed announcement in December.

Probabilities favor the bulls in the NASDAQ this coming week but only for limited upside.

SPX Friday closing price - 2089

The SPX also generated a positive reversal, having gone below the previous week's low and above the previous week's high and closing in the green and near the highs of the week, suggesting further upside above last week's high at 2097 is likely to be seen. Nonetheless, the high and the low for the week was only 1 point higher and 3 points lower than the previous week, suggesting that all the traders did was negate the previous week's action, not make a statement.

It was surprising that the SPX is simply mimicking the other indexes, and not outperforming or underperforming the other indexes, given than a raise in interest rates will likely affect the financial industry more so than others. This likely means that the action this past week was more technical in nature (chart-oriented) than based on any fundamental change.

To the upside and on an intra-week, the SPX shows minor resistance between 2112 and 2114, minor to perhaps decent at the recent high at 2216 and decent at 2119. Above that level, strong resistance is found at the all-time double top at 2134/2132.

To the downside and on an intra-week basis, the SPX shows minor support at 2079, minor to perhaps decent at 2068, that includes the 200-day MA, currently at 2065, minor again at 2058 and decent between 2039 and 2044. Below that level, now decent support is found at 2019.

It should be mentioned that the SPX is also somewhat mimicking what happened last December when the index dropped 107 points (from 2079 to 1972) and this time dropped 97 points (from 2116 to 2019). The only difference being that last year the index was trading lower in price when the flash correction occurred than the 2116 level from which the correction occurred this time. By the same token, last year the index got back up to the previous high just 4 days after the low was made, whereas the index has now rallied 6 days from the low and still finds itself 27 points from the previous high, suggesting that the mimicking is not going as well for the bulls as it did last year. With a shortened Thanksgiving week ahead, that difference is likely expand even more, suggesting that the index is not likely to get above the previous high (2116) as it did last year, which in turn suggests the end result will be different.

Probabilities favor the SPX showing limited strength this week with the index getting up to somewhere between 2102 and 2114, followed by weakness the week after Thanksgiving as the Fed decision week approaches.

The traders simply do not have enough information at this time to make a clear determination as to what the Fed will do in December. As such, the traders seem to be trading technically within the support and resistance levels presently in place, much like they have done for the past 9 months. With the shortened Thanksgiving week ahead, it is unlikely that much will be seen this week, though some further but limited upside is likely to be seen as the momentum last week is likely to carry over this week.

It is important to note though, that nothing is likely to be decided fundamentally until the next Fed meeting occurs in mid-December, meaning that if the market is trading technically, the probabilities favor more weakness than strength being seen over the next 4 weeks, somewhat mimicking what happened last year in December.

There are quite a few economic reports of consequence due out this week, with the 2nd estimate of GDP, the 20-city Case/Schiller report and Consumer Confidence coming out on Tuesday, Personal Income and Spending, Durable Goods, Michigan Sentiment and New Home Sales coming out on Wednesday. Nonetheless, with the exception of the 20-city Case/Schiller report that is due out about the same as last month, all other reports are expected to come out better than expected and that would likely be a bit more of a negative than a positive as it would suggest even more strongly that the Fed will raise interest rates in December. Then again, none of these reports are likely to be important enough to generate strong movement on a week when many of the traders are likely to be away.