DOW Friday closing price - 17865

The DOW made a new 6-week high this past week, having gotten above the 18000 level for the first time since the last week of April. Nonetheless, the bulls were unable to make a statement, given that the index ended up closing near the lows of the week on Friday, suggesting further downside below last week's low at 17812 will be seen this week.

The DOW seems to be back into the sideways trading range that has dominated the action for the past 18 months, having closed once again between 17670 and 18030, and event that has occurred 38 times out of the last 78 weeks, on 26 out of 36 weeks between the first week of February and the last week of July 2015, and on 8 of the last 11 weeks.

The inability of the bulls to get the DOW above the top of the 18000 demilitarized zone, followed by the low of the week being made on Friday, does suggest the bulls have begun to run out of ammunition, especially considering that oil prices, which were the primary reason for the rally during the past 4 months, made a new 9-month high but also closed near the lows of the week and failed to generate a breakout on the weekly closing chart, also suggesting that some downside is now likely to be seen.

To the upside and on an intra-week basis, the DOW now shows minor resistance between 17914 and 17934, decent at last week's high at 18016 (and up to 18030) and decent to perhaps strong at 18167.

To the downside and on an intra-week basis, the DOW now shows minor support at 17744, minor to perhaps decent, as well as short-term pivotal at 17664, minor to decent at 17580 and minor to decent again between 17464 and 17484. Decent and short-term pivotal support is found at 17331.

The DOW chart suggests the 17664 level is now an important short-term pivot point. Based on the 200 point trading range seen last week and the lows of the week having been made on Friday, it is probable that the traders will target reaching that level (and up to 17700) for the first few days of the week, until the FOMC rate decision on Wednesday.

By the same token, with the rate decision likely already factored into the price of the DOW and oil prices likely to have found a temporary top, the probabilities now favor the bears.

NASDAQ Friday closing price - 4894

The NASDAQ had negative and possibly short-term indicative week this past week, having failed to close the gap up at 4999 and then making a new 11-day low and in the process generating a new gap (between 4940 and 4917) that could end up becoming a runaway gap. The index closed on the lows of the week, suggesting further downside below last week's low at 4880 will be seen this week.

The NASDAQ led the indexes to the downside this past week, having dropped 1% in value while the SPX dropped .02% and the DOW rallied .04%. The return to being the leader to the downside or anchor to the upside is a negative sign, especially since the Tech Sector was supposed to be the industry to lead the market to new highs. AAPL, AMZN, NFLX. PCLN, and GOOGL all had negative weeks and weekly closes that suggest further downside will be seen this week.

To the upside and on an intra-week basis, the NASDAQ now shows minor to perhaps decent but certainly short-term indicative resistance at 4921. Further but very minor resistance is found at the gap seen on Friday at 4940 and then minor to decent resistance between 4960 and 4970. Decent resistance is now found at 4979 and then nothing until decent resistance is found at 5042.

To the downside and on an intra-week basis, the NASDAQ shows minor to decent but also short-term pivotal support at 4971/4972. Below that level, there is decent support at 4808 that includes the 200-day MA, currently at 4818. Further but minor support is found at 4734.

The NASDAQ is facing a gap important week, given that there is a gap to the downside between 4865 and 4872 and a gap to the upside between 4919 and 4940. Both of those gaps will be in the minds of the traders this week as closure of either of the gaps is likely to generate movement of consequence in whichever direction the gap is closed. The probabilities favor the downside gap being closed as the weakness seen this past week in the Index's main stocks, as well as in oil, is likely to make the 200-day MA, currently at 4818, into a bit of a magnet as traders seek the kind of chart support that could be meaningful.

In addition, the chart of the NASDAQ is suggesting that a "kinda-like" inverted Head & Shoulders formation might be forming with the right shoulder likely to be around 4808, the head at the double bottom at 4684/4678 and the right shoulder in the building process. The neckline is the line drawn between the highs at 4969 and at 4979. The formation cannot be considered a true a H&S formation since the head is not a major low, but the formation is clearly defined and suggestive of H&S action, meaning that a right shoulder is likely to be built at this time with 4808 as a likely objective for the right shoulder.

The probabilities favor the bears this week in the NASDAQ.

SPX Friday closing price - 2096

The SPX generated a negative reversal week, having made a new 11-month intra-week high but then closing in the red and near the lows of the week suggesting further downside below last week's low at 2089 will be seen this week. In addition and using the weekly closing chart, the bulls were unable for the 3rd week in a row to close above the high weekly close for the past 10 months at 2099, further suggesting that positive fundamental changes are required for any additional upside to be seen.

The negative reversal in the SPX was especially disappointing to the bulls, inasmuch as a high percentage of analysts were expecting the index to make a new all-time high weekly close above 2126 last week and having gotten up to 2120 (just .03% below) and not seeing any negative catalysts occur, made the reversal all the more indicative of failure.

To the upside and on an intra-week basis, the SPX now shows minor resistance at 2103/2105, minor to decent between 2111 and 2116 and now decent at 2120. Above that level, there is minor resistance at 2125 and strong at the double top at 2134.

To the downside and on an intra-week basis, the SPX shows minor but likely short-term pivotal support at 2085 and minor but likely mid-term pivotal support at 2070 and then minor to decent support between 2039 and 2044. Further and likely longer-term pivotal support is found at 2025.

The SPX is now showing the possibility of a failure signal of enough importance as to affect the mid-term outlook for the index (mid-term meaning 2-3 months). An intra-week break below 2085 would likely cause the index to drop back down to the 2067/2070 area and a break below 2067 would suggest that the 2039/2044 area would become the target for the summer.

The SPX has been the index to watch and given that a negative reversal occurred last week and that the DOW was once again the leading index (safety of Blue Chip stocks), suggests that the traders may be giving up on making a new all-time high before the summer is over. With the probability that a no-interest-rate-hike-for-June is already factored in to the price and the weakness seen this past week in the financial industry (GS making a new 4-month weekly closing low and giving a sell signal), it does suggest that the bulls may have run out of ammunition to generate any new buying interest at these prices.

Probabilities favor the bears in the SPX this week.

This past week was very disappointing for the bulls, inasmuch as the indexes were supposed to continue higher but negative reversals occurred in spite of a lack of news. Oil prices made new multi-month highs but the bulls failed to "seal the deal" when oil closed below weekly close resistance levels, also strongly suggesting that some correction to the 4-month rally (and overbought condition) is about to occur.

The FOMC rate decision is due out on Wednesday but the probabilities of a rate hike are down to only 4% and as such, the pluses of no-interest-rate-hike are likely already factored in, meaning that the announcement is not likely to give the bulls any ammunition with which to reverse the negative action seen last week. With both oil and indexes showing signs of further downside, the probabilities now favor the bears, at least for further sideways action or perhaps a small correction going into the slow summer months.

Without any surprises likely to happen this week, the burden of proof is back on the shoulder of the bulls.