DOW Friday closing price - 17832

The bulls in the DOW were unable to generate any follow through to the upside this past week (after the previous week's new all-time intra-week and weekly close), having failed to get above last week's high at 18103 and then closing in the red on Friday, suggesting the possibility that the previous week's high weekly close at 18053 may not only be a successful retest of the 18000 level but also a top to this uptrend.

The DOW closed near the lows of the week and further downside below last week's low at 17731 is expected to be seen this week.

With the 18103 high seen the previous week, it can be said the DOW has accomplished its immediate upside objective of reaching an important psychological resistance level as the previous 2 highs at an even level were at 16174 (when the 16000 level got broken) and at 17151 (when the 17000 level got broken). From both of those highs the index corrected 3 and 4.8% respectively. By the same token, both those previous highs did see new highs made after the minor correction, meaning that there is yet no strong chart reason to think this present high at 18103 is anything else than a possible temporary top.

To the upside, the DOW will now show resistance at 17991 and at the all-time high at 18103 (17958 and 18053 on a daily closing basis). To the downside, the DOW will show minor intra-week support at 17726, at 17603, and at 17500. Further support and a bit stronger will be found at 17278 but mostly on a closing basis.

Chart-wise, the traders in the DOW do not have enough chart information on either direction to make any decisions at this time. The index is too far away from the closest support that is reliable (down around the 17278 level) and to the upside not enough has been done yet for a sell signal to be given, suggesting the traders will be keying this week on fundamental information, such as the Russian economic crisis, the Greek debt problem, the price of oil or even the Jobs report next Friday. In addition, the Fed will have its monthly FOMC minutes announced on Wednesday and though no new changes are expected to come out, it is a report that the traders often use to move the index in one direction or the other.

The probabilities still favor the bulls in the DOW, inasmuch as the uptrend remains intact and not enough negative action has yet happened to give the bears any ammunition they can use with confidence. I would venture an educated "guess" that the index will trade this week between 17700 and 18000 and only if there are any fundamental surprises will the index move off of those parameters.

NASDAQ Friday closing price - 4726

The NASDAQ has found an area of resistance between 4782 and 4814 that the bulls have been unable to break above for the past 6 weeks, in spite of the fact the other indexes have gone higher and that there is no previous chart resistance found until the 5000 level is reached. The index has been to this area every week since the third week of November but other than making a new 14-year high by 4 points 2 weeks ago, further upside of any consequence has not been seen.

The NASDAQ closed near the lows of the week and further downside below last week's low at 4698 is expected to be seen. If that happens and the bulls are unable to rally the index above 4810 on Monday, a double top at 4810/4814 will not only have been built but confirmed, suggesting a real possibility that a top, albeit perhaps short-term, has been found.

The NASDAQ did generate a red monthly close on Wednesday but did close near the highs of the month, suggesting further upside above 4814 will be seen this month. With the index having already made a new all-time high monthly close in November and confirming the new high in December, the probabilities still favor further upside with the all-time high weekly close at 5048 or the all-time intra-week high at 5132 still as upside objectives.

Nonetheless, it does need to be mentioned that the NASDAQ did generate 4 alternating red and green monthly closes in the year 2000 when it made the all-time high and having already generated a red close last month, if the index closes in the green next month it will be much like it was back then, suggesting that February could generate the retest of the 5132 level as well as a top to the uptrend is a red monthly close is seen.

To the upside, the NASDAQ shows intra-week resistance at will show minor resistance between 4788 and 4814 with weekly close resistance at 4791 and 4806. The daily closing chart shows identically the same resistance levels as the weekly chart but has one added but minor resistance at 4780. Some resistance is found on the intra-day at the 200 60-minute MA, currently at 4740.

To the downside, the NASDAQ will show minor support at 4727 and then minor at 4697 which is the top of the gap area between 4651 and 4697. Further support is found on the intra-day 60-minute chart between 4674 and 4679 and then nothing until very minor intra-week but pivotal weekly close support at 4653. Should that support be broken on a weekly closing basis, the index would likely get down to the 4547 level that if broken on a daily closing basis would give a failure to follow through signal that would likely be a confirming sign that the index has found a major top.

The key to the NASDAQ this week is likely to be the gap area which was already reached with last week's low at 4698 and if closed would put the bears in a position to generate a weekly close below 4653, which in turn would be a sell signal that would be difficult to negate without strong fundamental help. The second key will be a red or green weekly close next Friday "after the Jobs report". A green close next Friday would renew the buying interest while a red close next Friday would keep the index under selling pressure.

It does seem like the NASDAQ has a lot of chart parameters that need to be fulfilled this week, with closure of the third gap being the primary one as this gap should be closed if the bulls don't want to be looking over their shoulders the next month or two. Nonetheless, closure of the gap will open a big window for the bears and that means that once the third gap is closed, the bulls need to come in with strength and attempt to generate a green close next Friday.

A green daily close in the NASDAQ on Monday would be considered a positive and likely would generate enough buying to get the index back up to the 4791 level where the bulls and bears would have an important skirmish one more time. Probabilities slightly favor the bears this week.

SPX Friday closing price - 2058

The SPX failed to follow through on the previous week's new all-time intra-week and weekly closing high, as well as the close on the highs of the week, and ended up closing in the red and near the lows of the week, not only suggesting that further downside below last week's low at 2046 will be seen, but that a failure to follow through signal will be given if the index does not generate a green close next Friday.

The SPX is likely to be the index the traders will be keying on this week since it does have a "close-by" daily closing support at 2053 that is likely pivotal and would help the traders decide what to do the rest of the week. The chart shows that a close below 2053 would likely cause enough selling to be seen to take the index back down to the 2000 level and if that happens, the bulls will have a tough time generating enough buying interest to continue the uptrend.

To the upside, the SPX shows intra-week resistance at 2079 and decent resistance at the all-time intra-week high at 2093 (2075 and 2090 on a daily closing basis). To the downside, the SPX will show minor but likely pivotal daily close support at 2053 (2046/2049 on an intra-week basis). Below that level there is no intra-week support of any consequence until 2001. Pivotal longer term support is found at the low seen 3 weeks ago at 1972.

It is likely that the SPX will give a clue as to what will happen during the week as early as Monday, especially if the stock generates a red close on Monday below 2053. By the same token, a green close above Friday's close at 2058 would likely generate new buying interest. Probabilities slightly favor the bears.

The market generated quite a bit of volatility in December due to the myriad of negative world events such as the price of oil dropping and the Russian Ruble dropping strongly in value. The economic reports did not help the bulls though it must be said that those reports were mostly ignored.

The New Year is likely to bring the same type of 2-way action seen in December as earnings are not expected to grow and the World's problems not expected to diminish. By the same token, with the U.S. now being seen as a haven for investors and the Fed continuing its low interest policy, money will likely remain in the U.S. Market.

The Jobs report is due out on Friday but it is unlikely to clear up anything or generate much movement in either direction, suggesting that traders will be looking mostly to the charts, earnings and world events for direction for the first few weeks of the year. With earnings generally expected to disappoint, the downside, rather than the upside, likely has more appeal to the traders at this time, though probably on a limited basis.