DOW Friday closing price - 18552

The DOW generated a small sell signal on Friday, having closed below the most recent low weekly close at 18432. Nonetheless, having stayed above the previous all-time high weekly close at 18272 and not broken the most recent intra-week low at 18247, the sell signal could be considered a short-term anomaly given that the fundamental reason for the signal was fear that the Fed might raise interest rates twice over the next 4 months based on what was said by Fed Chief Yellen. If the Fed does not raise interest rates in September, the sell signal will likely be negated.

The DOW closed near the lows of the week and further downside below last week's low at 18335 is likely to be seen. By the same token, the index has now spent 6 weeks trading sideways in a 420 point trading range between 18247 and 18668 and with the Fed talking about the possibility of raising interest rates twice more this year "because" the economy continues to improve, it does suggest that it will not be a negative if it "actually happens".

To the upside and on an intra-week basis, the DOW shows minor resistance at Friday's high at 18572, a bit stronger at 18631 and decent at the all-time high at 18668. Above that level, there is minor psychological resistance at 18700 and decent psychological resistance at 19000.

To the downside and on an intra-week basis, the DOW now shows minor to decent support at the 6-week low at 18247. Below that level there is psychological support at the 18000 demilitarized zone and then no support until the 17713 level is reached, which is now considered pivotal support. On a daily closing basis though, support is decent and now longer term pivotal at 18313.

Because of the news on Friday, with Fed Chief Yellen saying the economy is improving but also saying that it opens the door for 2 more interest rate hikes this year, the DOW had the biggest trading day (237 points) in 2 months. The index generated a negative reversal day, having gone above the previous day's high and then closing below the previous day's low. The negative reversal suggests follow through to the downside will be seen on Monday, especially given that there are no scheduled reports to prevent it from occurring.

Nonetheless, there was some buying interest on Friday as the DOW rallied 60 points in the last 90 minutes of trading, suggesting the follow through to the downside this coming week will be limited. With the index having made a new all-time intra-week high on August 15th at 18668, which was 46 points higher than the previous high made on July 20th at 18631, it can be thought that the index will get down this coming week to 18293, which would be the same 46 points above the 18247 low seen on August 2nd, and in the same time frame (4 weeks) as seen between the highs.

The probabilities do favor the bears in the DOW this week but unless 18247 is broken intra-week and a daily close is generated below 18313 and a weekly close below 18272, the bears will have accomplished nothing, meaning that another rally and possibly to new highs (perhaps to 18700-18730) could be seen by September 15th before the September-October swoon begins.

SPX Friday closing price - 2169

The SPX generated the lowest weekly close in the last 6 weeks but did not break the 6-week intra-week low at 2147, meaning that though it was a negative week no chart damage was accomplished by the bears. Nonetheless, the index did close near the lows of the week and further downside below last week's low at 2160 is expected to be seen this week.

On a negative note though, the SPX now shows a double top on the intra-week chart at 2193, having made that high on August 15th and August 24th. By the same token, there is no double top on the weekly chart, given that those 2 highs were seen 2 weeks "in a row", thus not giving the double top on the daily chart the strength it might otherwise have.

By the same token, it is evident that the SPX bulls have not been able to "break the camel's back" as the index has only been able to gain 18 points (.008%) over the past 5 weeks, having made a high at 2175 on July 20th and a high of 2193 on Tuesday of this past week (August 23rd). As such and with the news that came out this week about the possibility of 2 more interest rate hikes this year, the bulls will have to show the ability to hold support before any consideration can once again be given to taking the index higher.

To the upside and on an intra-week basis, the SPX now shows minor resistance at 2175, minor to decent at last week's high at 2187 and decent at the double top at 2193. Above that level, there is psychological resistance at 2200.

To the downside and on an intra-week basis, the SPX now shows minor support at 2159 and minor to decent but short-term pivotal at 2147. Below that level there is no intra-week support until minor to perhaps decent support is found at 2074. By the same token, the previous all-time daily closing high at 2130 (2126 on a weekly closing basis) will be considered decent daily closing support.

The SPX still has a 2215 objective, which is obtained by using the 3.8% rally in 2012 above the previous intra-week high seen in July. If the bulls are able to stay above the 2147 low seen 4 weeks ago, buying interest will resume. Nonetheless, for this week, the bears will have the edge at the beginning of the week as the bulls will be in a defensive stand.

NASDAQ Friday closing price - 5218

The NASDAQ capped the green weekly close run at 8, having generated a red close this week for the first time since the third week of June. The index closed in the lower half of the week's trading range, suggesting further downside below last week's low at 5191 will be seen this week.

By the same token, the bears in the NASDAQ failed to make a statement, given that in spite of the red weekly close it was still above the previous all-time high weekly close at 5210 and that means that if a green weekly close is seen next Friday that a successful retest of the previous high weekly close will have been accomplished, which was expected to happen anyhow.

In addition, the NASDAQ generated a positive reversal day on Friday in spite of the negative Fed news that there is a possibility of 2 more interest rate hikes this year, given that the 5191 low was seen on Friday but the index closed in the green. The positive reversal takes most of the chart negatives away from the announcement.

To the upside and on an intra-week basis, the NASDAQ now shows minor resistance at Friday's high at 5253 and minor to decent at 2171/2175. Above that level there is no resistance at all, other than perhaps "general" at 5300 (300 points above an even level, such as 5000).

To the downside and on an intra-week basis, the NASDAQ shows minor support at Friday's low at 5191 and again at 5186 which is the top of the most recent gap between 5174 and 5186 seen on August 5th. Below that level, there is no support until minor to perhaps decent support is found at 5109. Nonetheless, on a daily and weekly closing basis, the previous all-time highs at 5218 (daily) and 5210 (weekly) are pivotal as a close below those levels will generate a failure to follow through signal.

The NASDAQ rallied 31 points in the last 90 minutes of trading on Friday to close above both of the previous all-time high daily and weekly closes (see above), suggesting that Friday's negative action was not seen as a longer term negative. If that is the case, the index will not see any red closes below 5218 this week, or at least no confirmed red closes (2 in a row).

Based on what happened in 2012, the year that is most mimicking this year when the July-August swoon did not occur, the NASDAQ has potential to rally anywhere from an additional 2.8% to as much as 4.75% from its previous all-time intra-week high at 5231. This is all based on what it and the other indexes did that year. As such, potential upside objectives for a top to this rally (before the next September-October seasonal swoon occurs) could be anywhere from a low of 5367 to a high of 5475. It does need to be explained that these "possible" upside objectives could take as much as another 3 weeks to reach.

Based on the action seen on Friday, the probabilities favor the bulls in the NASDAQ this week, though some intra-day selling could be seen on Monday.

The bulls were starting to think that new highs would be made before they got a bucket of cold water from the Fed Chief Yellen that stated that the economy might be moving at a good enough pace where 2 more interest rate hikes before the end of the year could occur. The news stopped the bulls in their tracks and opened the door for re-evaluation of the situation.

This coming week is going to be very important since the 2 most important economic reports of the month (ISM Index and Jobs) will come out on Thursday and Friday, in addition, to the 20-city Case/Schiller, Consumer Confidence, Personal Income and Spending, and Chicago PMI reports that come out during the week. It is highly likely that the Fed will decide whether to raise interest rates in September based on the information that comes out this week, meaning that much is likely to be decided by Friday.

The bulls were able to prevent the bulls from taking control on Friday, in spite of the negative news regarding the interest rate scenario, suggesting that the action for the week before the end of the week reports will likely be 2-way (both red and green) but that neither support nor resistance levels will be broken. As such, it is unlikely that any decisions will be made during the first 3 days of the week.