DOW Friday closing price - 18146

The DOW has seen a 1103 point rally over the past 2 weeks after having reached a strong double low support level between 17037/17067 that was built back in December/February 2014/2015 and from which the all-time high at 18351 was made. The drop to the 17066 low that was seen 3 weeks ago and that was generated by the Brexit vote held up strongly given that the Brexit negatives are not likely to occur for another 2 years, meaning the technical chart support came into play. All of the negatives seen after the vote have now been erased.

The DOW closed on the highs of the week and further upside above last week's high at 18166 is expected to be seen this week with the big question being whether the bulls have enough fundamental ammunition now to make new all-time highs or whether the technical chart resistance that has stopped the index for the past 14 months will prevent new highs from being made.

The DOW has upward momentum at this time and with the SPX having made a new all-time high weekly close on Friday, the probabilities favor the all-time high at 18351 being tested this week, especially since there is no index or fundamental news of consequence due out this week.

To the upside and on an intra-week basis, the DOW shows decent resistance at 18167, minor between 18188 and 18205, decent again at 18288 and strong at the all-time high at 18135.

To the downside and on an intra-week basis, the DOW shows minor to decent but short-term pivotal support at 17713, minor to decent again at 17471, decent at 17333, and decent to strong between 17037 and 17067.

It must be mentioned that the Death Cross scenario is still in place and viable in the DOW, given that the Death Cross that occurred in January 2001 did generate a new high 20 weeks later (above the high made after the Death Cross occurred) and the same thing is happening now with the new high likely to be made this week, 18 weeks after the Cross occurred. In 2001, the index saw a drop of 1518 points the first time (now it was 1104 points), a rally above the previous high by 300 points and then a longer term drop of 3500 points over a period of 21 months. A mimicking of that scenario is still highly possible, especially given that the Brexit vote is a longer term negative that will not likely go away.

For this week, the DOW is likely to continue higher with the 18288 level as the likely objective, to be seen either this week or the next. Keep in mind that the earnings quarter begins this week and usually the indexes rally or at least show some strength during the first 3 weeks of the quarter. As such, it is not expected that the index will show any weakness until the 3rd or 4th week of the month.

The big key though, will be whether the bulls can make new all-time highs in the DOW or not. New highs in the SPX are not unexpected since this rally is mostly based on the low interest rate scenario now in place, which does give additional support to financial stocks. Nonetheless, neither the DOW or the NASDAQ should be making new "all-time" highs, if and when the Death Cross scenario is to work again this time.

Probabilities favor the bulls in the DOW this week.

NASDAQ Friday closing price - 4956

The NASDAQ made a new 7-month weekly closing high on Friday, above the previous one at 4943 seen 6 weeks ago, and closed on the highs of the week, suggesting further upside above last week's high at 4958 will be seen this week.

The NASDAQ has now erased all of the weakness seen after the Brexit vote and now seems poised to close the gap up at 4999 that occurred the first week of the year and that has kept the index as the anchor of the market.

On a possible negative note though, the Death Cross in the NASDAQ will occur this week as the 50-week MA, currently at 4828, is poised to cross under the 100-week MA, currently at 4820. The Death Cross has occurred twice in the past 20 years and both times it was a strong negative signal that caused the index to drop an additional 1200 points from the highs seen after the cross occurred.

To the upside and on an intra-week basis, the NASDAQ now shows minor to perhaps decent resistance at 4970 and minor to decent resistance at 4980. Above that level, there is minor resistance at 5008, minor to decent at 5042, and decent as well as indicative between 5116 and 5119.

To the downside and on an intra-week basis, the NASDAQ now shows minor but likely short-term pivotal support between 4901 and 4908, minor to decent at 4808 and minor to decent again, as well as pivotal, at 4796.

The NASDAQ will likely be the most watched this week, given that there has been a gap to the downside since the first week of the year (7 months) between 4980 and 4999 that should be closed now that the indexes have not only erased all of the Brexit negatives but that one of the indexes (the SPX) has made a new all-time high weekly close. In addition, the index now also shows a breakaway/runaway gap formation to the upside between 4692 and 4732 and between 4889 and 4901 that should give the bulls enough chart ammunition to close the gap at 4999. As such, closure of the 4999 gap will be a clear signal as to whether the index remains under a negative scenario or whether that scenario may be changing.

The action seen the last 2 weeks does suggest that the NASDAQ will close the gap at 4999 and likely rally up to the next resistance level at 5042 where selling interest is once again likely to be found. The bears though, would like to see the gap unclosed as it would be a "clear signal" that at least in the Tech sector that the bulls have not gained back any control. It seems evident that if the Tech Sector does not gain back some control that the rally in the rest of the market will fizzle, especially considering that SPX stocks are not likely to carry the market very far to the upside.

Probabilities favor the bulls in the NASDAQ this week but they do have their "work cut out for them", especially considering that there are no earnings report in that sector this coming week.

SPX Friday closing price - 2130

The SPX made a new all-time weekly closing high, having closed above the previous double top weekly closing high at 2126. The index closed on the highs of the week and further upside above last week's high at 2131 is expected to be seen this week, suggesting that a new all-time intra-week high above 2134 will occur as well.

The SPX is the index that has been receiving the most buying interest since the world's interest rate scenario is one of extremely low interest rates with very little outlook for change any time soon. As such, financial stocks have led the way to the upside and likely will continue to be the most supported until the interest rate scenario begins to change. Brexit certainly set the bar very high for potential interest rate hikes in the U.S. or elsewhere since raising of interest rates at this time would exacerbate the Brexit issue in a further negative way.

To the upside and on an intra-week basis, the SPX now shows decent resistance at 2134 and then nothing above since that is the all-time intra-week high.

To the downside and on an intra-week basis, the SPX shows minor to perhaps decent but certainly short-term pivotal support at 2074, minor at 2063 and decent as well as pivotal support at 2050.

The SPX is now likely to make a new all-time intra-week high this week but given the fundamental scenario such a new high will not be as indicative as if one of the other indexes were to do it. Simply stated, it is expected that the index will continue to be the most supported but not necessarily the most indicative of future outlook.

The one thing that the traders will be paying close attention to in the SPX is the Death Cross, given that this is the only time that the index has maintained itself "above" the Death Cross after the cross occurred. In the previous 2 Crosses, the index was below and stayed below the MA's but on this occasion and for the past 10 week since the Cross occurred, the index has been above the MA's. The 50-week MA has begun to slowly turn back up and if the index continues to move higher the Cross could be negated, possibly in about 6 weeks. As such, the next 3 weeks, especially the next week and a half when the big financial stock earnings reports come out will be crucial to the future outlook of the index.

For this coming week, the probabilities favor the bulls in the SPX with the big question is "how much above the previous all-time intra-week high at 2134 can the bulls accomplish". If the answer to that question is "just a few points" and the earnings reports due to come out Thursday and Friday (JPM, C, and WFC) do not support further upside, the index could generate a failure signal and that would be a strong negative sign.

The negatives of the Brexit vote have been annulled as the indexes have rallied back to the previous highs (or higher) than just previous to the vote. The likely reason for the annulment is that the negatives are not likely to be felt for another 2 years, meaning that there is no reason at this time to have the market stay down since the effects will not be felt for some time to come.

The indexes, after the Brexit vote, did get down to important long term supports that held up and because of that, a technical rally occurred that has taken the indexes back to or near previous all-time highs that could be broken if the earnings reports back up the euphoria presently being felt. With the Jobs Report coming in much better than anticipated and the ISM Index slightly better than anticipated, the bears find themselves with no ammunition other than the previous chart highs with which to stop the rally.

The next 2-3 weeks will likely "tell the story" and probably all based on the earnings reports. By the same token, with this being summer, the probabilities of the earnings reports coming in better than expected is low, meaning that the seasonal correction seen the past 4 years and that normally starts the end of July and through the end of August will probably occur once again.