DOW Friday closing price - 16204

The DOW generated a negative reversal week, having made a new 3-week high but then closing in the red and on the bottom half of the week's trading range, suggesting further downside below last week's low at 15960 will be seen this week. The negative reversal and red close strongly suggests that the correction is not over yet and that the multiple bottom on the weekly closing chart at the 16000 demilitarized zone is likely to be broken this coming week.

The downside target for the DOW has to be the 200-week MA, currently at 15785, which has now been tested on 2 occasions within the past 5 months (in August and again 3 weeks ago) and now likely to be tested again. Nonetheless, the previous retests of the line have all been on an intra-week basis and based on the disappointing action seen last week, the probabilities strongly suggest that the index will now be testing the line on a weekly closing basis, meaning that either this coming week or the next the index will probably close around the 15785 level. This is further strengthened by the fact that the index is showing multiple lows on the weekly closing chart at the 16000 level, suggesting they will be broken at some point.

Ever since the DOW failed to make a new all-time high on the rally seen in November (after the big correction that occurred in August), the probabilities have favored the index going below the August low at 15370. The same situation occurred in 2001 when a very similar correction occurred as the one seen over the past 5 months. On that occasion and after the index tested the 200-week MA successfully, the rally seen thereafter failed to break above the previous high (the same as seen this time around) and the subsequent drop made a new low below the previous low (10604 to 10404). As such, the probabilities suggest the index will get below the August low before the bulls get "back on board".

To the downside and on an intra-week basis, the DOW shows minor support at 15960 and minor but likely pivotal support at 15863. Below that level there is no support until the January low at 15450. Further but decent intra-week support is found between 1530 and 15370, which were the lows seen in August of last year and in February 2014. Below that level and other than the psychological support at 15000, there is minor to perhaps decent support at the 14700 level and then nothing until 2007 high weekly close at 14093.

To the upside and on an intra-week basis, the DOW shows minor to perhaps decent resistance between 16485 and 16510and then minor but likely short-term pivotal at 16591.

The DOW has seen the most buying interest as of late, given that whatever buying is being seen is targeting the safety of the Blue Chip stocks. As such, it is not the index that will be the most indicative for the traders other than if the 15340 level of support breaks, some panic is likely to ensue for the entire market.

As far as mentioning what "could happen", It does need to be mentioned that DOW is showing an inverted flag formation with the flagpole being the drop from 17977 to 15450 and the flag being the action seen the last 3 weeks back up to 16510. If the bottom of the flag at 15450 is broken, a downside objective of 13983 will be given. It is difficult to imagine that occurring but then again considering that the 2007 high weekly close was 14093, the chart does show it as a viable objective if and when panic selling occurs of the index breaks the 15340 level. It also needs to be mentioned that in the 2011 correction the DOW dropped 19.2% and was on the verge of giving a recession signal. A drop of that magnitude at this time would offer a downside target of 14717.

Once again it does need to be stated that it is unlikely that the 200-week MA, currently at 15785, will be broken on a weekly closing basis. It was not broken in 2011 and is not likely to be broken now. Nonetheless, the probabilities strongly favor the bears in the DOW this week with the big question being "how much will they accomplish to the downside".

NASDAQ Friday closing price - 4363

The NASDAQ generated a new 15-month weekly closing low on Friday and did close on the lows of the week, suggesting further downside below last week's low at 4350 is likely to be seen this week. The Tech sector has been seeing the most selling interest, with AMZN dropping almost 15% in value this past week and GOOGL (which did receive a much better than expected earnings report) dropping 13.6% from the new all-time high in the last 3 days of the week. It is expected that the selling interest in Tech Stocks will continue to dominate this coming week.

The NASDAQ fell 5.5% this past week (from weekly close to weekly close) and when compared to the 1.6% in the DOW and the 3.1% in the SPX the weakness seen (compared to the other indexes) has to remain as the main cause of concern for the bulls as this was the index that led all rallies in the past and as long as the NASDAQ continues to lead the way down, the market is not about to recover.

To the downside and on an intra-week basis, the NASDAQ shows decent support between 4292 and 4313 and then minor to decent at 4116. Decent and likely long-term pivotal support is found at the 4000 demilitarized zone, which does include the 200-week MA, currently at 4050.

To the upside and on an intra-week, the NASDAQ shows minor resistance at 4591 and minor to decent, as well as short-term pivotal, at 4636.

In August of last year, the NASDAQ made a major spike low at 4292 that helped generate a strong rally that was supposed to re-stimulate the uptrend and make a new all-time high above 5231. The bulls failed after getting up to 5176, and as such, a retest of the 4292 was expected to be seen. Three weeks ago, the index dropped down to 4313 and a bounce occurred, which should have brought about another strong rally and retest of the previous highs but the rally failed to go more than 300 points (6.1% rally up to 4636) and now the index is back down near the previous lows and the disappointment being felt is likely to cause both previous lows to be broken.

The 200-week MA, currently at 4050, is now likely to be a magnet for the traders as that line represents the long-term uptrend (which is being questioned right now) and is a line that has not been tested since October 2011 and has not been broken since August 2010. The probabilities do favor that line being tested on this drop, if and when the 4292 intra-week support level is broken (likely). The index does show some intra-week support at 4116 that could hold up, given that the MA line is only 1.7% below that level and in 2011, when the index tested the line, it came within 2.5% of the line (low of 2298 with the line at 2040). Nonetheless, a drop down to anywhere between 4000 and 4200 is highly likely to be seen this week or next.

It does need to be mentioned as well that the NASDAQ has weekly closing support at 4258 and then nothing until the 200-week MA at 4050. Further weekly close support is found at 3998. As such, where the index drops down to this week and where it closes this next Friday will be indicative, at least as far as what the index will do the week after.

Probabilities strongly favor the bears this week.

SPX Friday closing price - 1880

The SPX made a new 20-month weekly closing low on Friday and did close on the lows of the week, suggesting further downside below last week's low at 1872 is likely to be seen this week. The new low weekly close suggests that the traders will be targeting the 200-week MA, currently at 1788, as the downside objective.

The SPX has been receiving a large portion of the selling interest as of late, given that the interest rate scenario has changed for the first time in 8 years and that it is expected that the Fed will continue to raise interest rates in 2016 anywhere from 1-4 more times. With no possible relief from that outlook until the March FOMC meeting, the index is likely to continue to see a large portion of the selling interest as long as no recovery, or reasons for recovery, are found.

The SPX is now showing multiple lows (3) on the intra-week chart over the past 21 months at 1812, at 1814 and at 1820, suggesting that the traders are likely to target that area this coming week.

To the downside and on an intra-week basis, the SPX shows minor to decent support at 1867 but given that it was broken just 3 weeks ago, the support there is no longer dependable. Below that level, there is decent support between 1812 and 1820 and then nothing until weekly close support at 1785. Additional but minor support is found at 1767 and a bit stronger at 1737.

To the upside and on an intra-week basis, the SPX shows minor resistance at 1927 and then minor to decent but short-term pivotal between 1947 and 1950.

With the SPX having made a bearish new multi-month weekly closing low on Friday and there being no schedules economic reports this week that could negate the gloom that is presently being felt, it is unlikely that the intra-week support at 1867 will hold up, meaning that the triple lows between 1810 and 1820 will become a major bullseye target for the traders to break. As such, a drop down to the 200-week MA, currently at 1785, seems to be a highly likely target for this coming week, or at the latest the next. On an intra-week basis, the index could see 1750 or even the "general" support at 1700 before a bounce occurs.

Probabilities strongly favor the bears this week with a downside target of 1785, to be reached either this week or the next.

The indexes had a very negative week that did enough chart damage to anticipate/expect that further downside will occur, especially given the fact that there are no scheduled earnings or economic reports for this week that could be catalytically positive. In addition, the Tech sector is leading the way down and the charts of the main stocks in that sector (GOOGL, AMZN, NFLX) also had strong negative weeks that suggest further downside (perhaps of some consequence) will be seen as well. Simply stated, there seems to be nothing on the horizon for this week that could prevent further downside from occurring.

By the same token, if enough downside is seen to where the indexes reach the important long-term trend lines at the 200-week MA's, some technical buying could be seen as there is not yet enough evidence that the U.S. economy is in a recession. Considering that scenario, the probabilities then favor weakness being seen this week and then a positive reversal the following week, or in the best case scenario weakness at the beginning of the week and strength at the end of the week.

The price of oil is likely to play an integral part on what happens this week, especially if a new low below the recent low at 26.19 is seen or not and then only considering where the indexes are trading if and when that happens.