DOW Friday closing price - 18010

As has repeatedly been the case for the past 6 months, the DOW once again failed to follow through in a convincing manner to the upside, having gone above the previous high by only 63 points and then generating a red close on Friday and below the previous all-time high weekly close at 18140. This is the 3rd time since December 1st that a new all-time high has been made that within 1-3 weeks was negated. In addition, the high on December 1st was 17991 and the close on Friday was 18010, meaning that the bulls have accomplished a total rally of only 19 points over a period of 26 weeks, suggesting that there is no reason to be an aggressive buyer right now, especially since using the Slow Stochastic number, the index remains overbought.

The DOW closed on the lows of the week and further downside below last week's low at 17967 is likely to be seen this week. With Friday having been the last day in May, if the adage of "sell in May and go away" is to occur this year, it can be surmised that a top is now in place and that the previous week's high at 18351 is the high for the next few months.

To the upside, the DOW show minor intra-week resistance at 18197/18205, a bit stronger at 18288 and decent at 18351. To the downside, minor intra-week support is found at 17924 and at 18787, a bit stronger at 17330 and decent at 17579, which does include the 200-day MA, currently at 17580.

The DOW is likely to see some selling pressure this week as the Greeks have been given an end of May deadline for their next debt payment and the probabilities do not favor that payment being made. A Greek debt default that could lead to a possible exit from the Euro remains the most negative catalyst facing the market and due to the deadline, the issue is likely to hang over the market all week. By the same token, it was mentioned last week that there are some parameters in the contract that could allow the Greeks to extend the payment scheduled by a couple of weeks, meaning that a default this week may not be as catalytic as was thought last week. The charts suggest the index will see the 17800 this week, if and when the ISM Index report on Monday is not bullish.

The ISM Index report on Monday and the Jobs report on Friday are likely to be more important this week. The ISM Index could be have a strong negative effect if it comes in below 50. The index came out last month at 51.50 and it is forecast to come in at 51.60 on Monday. Nonetheless, the Chicago PMI number on Friday was expected to come in at 53 and it came in at 46. If the ISM does the same, it will likely have a strong negative impact on the DOW.

Probabilities this week seem to favor the bears in the DOW because of the negative action last week and the "sell in May and go away adage", which if it is going to work it has to start working "now". In addition, traders are starting to factor in the Fed raising interest rates in September and there are no reasons at this time to think that won't happen. As such, there are not a lot of reasons to be an aggressive buyer this week.

NASDAQ Friday closing price - 5070

The NASDAQ generated a negative reversal week, having made a new 4-week high and then going below the previous week's low and closing in the red. In addition, the red weekly close on Friday did make the previous week's close at 5089 into a double top on the weekly closing chart (5092 and 5089), which suggests the bulls will need fundamental help to negate that pessimistic signal.

The DOW closed slightly in the upper half of the week's trading range, meaning that the traders will await the fundamental reports due out this week before deciding on a direction. By the same token, the index has now been above 5100 on 5 occasions in the last 6 weeks, as well as generated a new all-time high daily and weekly close in the process, meaning the bulls still have the edge. On the other side of the coin, the bulls have not yet been able to get up to the all-time intra-week high seen in the year 2000 at 5132, suggesting that there are not enough fundamentals reasons at this time to help the bulls to break that level.

To the upside, the NASDAQ shows intra-week resistance at 5111, at 5119 and strong at 5132. Above that level there is no resistance. To the downside, last week's low at 5016 has to be considered indicative support, inasmuch as a drop below that level would give the bears chart reasons to sell. On a closing basis, the 5000 demilitarized zone has to be considered decent support, both psychologically and chart-wise but on an intra-week basis, there is no previous support until 4931 is reached. More important support is found at 4888, which includes the 100-day MA, currently at 4890, that has not been broken convincingly since October of last year.

The DOW did generate an additional chart negative on Friday, having closed below the previous all-time high weekly close double top at 5092/5089. The failure signal given, especially if confirmed next Friday, would likely generate at least the same kind of 200+ point drop seen the previous 2 times the same thing happened.

It should be mentioned that in the year 2011 the NASDAQ made a new 10-year high at 2887 (above the previous high at 2861 seen in 2007) and a few weeks later, after a small correction had occurred, the bulls attempted to resume the 2-year uptrend and were able to rally the index up to 2879, as well as close near the highs of the week, suggesting the following week the bulls would accomplish their goals. Nonetheless, no follow through to the upside was seen the following week and 3 weeks later the index began a correction that would end up shaving 20% off of its price. This tidbit of past chart history could end up being useful this coming week, especially since the index generated the same kind of action this past week as was seen on that past occasion.

Due to the reversal seen this past week, the probabilities now favor the bears.

SPX Friday closing price - 2107

The SPX was unable to follow through on the new all-time high at 2134 seen the previous week and as such, generated a red close and below the 2 previous all-time high weekly closes at 2117 and at 2110. The close below 2110 was more indicative since it did represent a double top as well as a level that held up as resistance for 8 weeks.

The SPX did close near the lows of the week and further downside below last week's low at 2099 is likely to be seen this week. With the 2100 level representing a psychological support level, it does mean that if the index trades below that level that the bulls will require some fundamental help to negate the psychological break of support.

To the upside, the SPX shows intra-week resistance at 2113, at 2119, at 2125 and at the all-time high at 2134. To the downside, minor intra-week support is found at last week's low at 2099, a bit stronger at 2085 and decent as well as likely pivotal at 2067. Important and strongly pivotal support is found at 2039, which does include the 200-day MA, currently at 2042.

The failure signal given on Friday by the SPX does give the bears the edge this week, meaning that the bulls will likely need positive economic reports to turn the index around.

The weekly chart, suggests the SPX should head down to at least the 2085 level before encountering any buying interest. Nonetheless, any lower numbers, especially if the index generates a daily close below 2080, would give the bears a stronger edge that would likely push the index down to the 50-week and 200-day MA's, currently at 2033 and 2042 respectively. A close below the 50-week MA would be strongly indicative of bearishness as that line has not been broken to the downside on a closing basis since December 2011.

The bears have the edge in the SPX this week but it is a week of fundamental reports and those will likely take precedence over the chart.

The indexes all gave signs that a top to this rally is now in place, especially considering the negative reversals seen last week and the "sell in May and go away" adage that is on the last week of possibility. As such, the bears have the edge for this week.

Nonetheless, this is a week of fundamentally potential catalytic reports with the ISM Index on Monday, the Jobs Report on Friday, and the Greek Debt issue deadline, any of which could turn the indexes around if positive, meaning this is a Missouri "show me" kind of week.

By the same token, the charts, the seasonal time frame, and the recent failure action does favor the bears, meaning that the onus is on the shoulders of the bulls.