DOW Friday closing price - 15988

The DOW made a new 5-month low on Friday, breaking below the previous intra-week low at 15942 seen in September 29th, as well as the 15855 low seen in October 2014, and then closing near the lows of the week, suggesting further downside below last week's low at 15842 will be seen this week. More importantly, the index made a new 23-month weekly closing low on Friday, below the 16026 weekly closing low seen in April 2014, suggesting that the index is now in a sideways market and no longer in the uptrend that started in 2008.

The DOW is once again facing an important chart week, given that there is no established intra-week support below until the 15340/15370 level (lows seen on Feb2014 and Aug2015) is reached and considering the fact that the last 2 weeks the index has generated trading ranges of 1091 and 751 points, it does mean that those last important and pivotal supports could be reached and broken this week if the negative scenario continues.

The DOW finds itself in a difficult situation given that the economic picture world-wide is deteriorating and likely to continue deteriorating this week, which in turn would suggest that a recovery in the index is not a likely scenario unless earnings reports come in much better than anticipated (not likely either). With oil prices just this past week making a new 13-year low and the Chinese Shanghai index making a new 13-month low (and both likely to continue lower), the outlook for the index is at least short-term negative.

To the downside and on an intra-week basis, the DOW shows decent support at the 15340/15370 level. Below that level, there is no intra-week support until minor to perhaps decent between 14716 and 14760. On a daily closing basis, support is decent to strong at 15666 and on a weekly closing basis, support is decent and definitely pivotal at 15698.

To the upside and on an intra-week basis, the DOW shows very minor resistance at 16465, minor but likely short-term pivotal between 16599 and 16569 and then decent at the 17000 demilitarized zone.

The DOW is once again near the 200-week MA, currently at 15765, which is expected to be seen this coming week. The line remains a very important support level on a weekly closing basis, given that it has not been broken to the downside since October 2010 (63 months). A break of the line (on a weekly closing basis) would suggest the index is now in a downtrend (unlikely).

The DOW did get down to the line in August on an intra-week basis (when it dropped down to 15370) but the bulls were able to generate a strong intra-week bounce off of the line, meaning that it was only tested on an intra-week basis and not on a weekly closing basis. The last time the line was tested on a weekly closing basis was in August 2011 and on that occasion, the bulls were only able to generate a small 6% bounce off of the line, before retesting the line 6 weeks later with a slightly lower close (10771 vs 10817). Based on the current economic scenario and the fact the index made a new 23-month weekly closing low on Friday, the probabilities once again favor the same scenario as seen in 2011, with the index generating a close at the line (around 15760), bouncing up for a few weeks (likely up to 16700) and then once again testing the line.

The outlook for the week in the DOW is negative with "how much negativity being seen" being the main question. With volatility still being prevalent and the likelihood being low of the August low at 15370 begin broken, I would venture an educated guess that the trading range for the week will be something like 15700 to 16300/16400.

NASDAQ Friday closing price - 4488

The NASDAQ closed at a new 15-month weekly closing low, below the previous one at 4635, as well as near the lows of the week, suggesting further downside below last week's low at 4419 will be seen this week. The index also closed below the 100-week MA, currently at 4700, for the first time since November 2011 (4+ years), meaning that this break of support likely has additional negative meaning to it.

The NASDAQ is likely to be the index that will receive the brunt of the selling interest this coming week, given that it has been the leader to the upside during the 7-year uptrend and now that important mid-term support levels have been broken, the focus of the traders is likely to fall on the shoulders of the Tech industry.

To the downside and on an intra-week basis, the NASDAQ has decent intra-week support at the August correction low at 4292. Below that level, minor to decent support is found at the October 2014 low at 4116 and then nothing until the 200-week MA, currently at 4025, that will only be support on a weekly closing basis. On a weekly closing basis, decent support is found at 4258 and then decent to perhaps strong but also long term pivotal at 4000.

To the upside and on an intra-week basis, the NASDAQ will show minor resistance 4714 level. Above that level, minor resistance will be found between 4777 and 4785 and a bit stronger at 4863. On a weekly closing basis though, the 100-week MA, currently at 4700 is likely to be decent and pivotal resistance for the next few weeks.

With the NASDAQ having broken important weekly close supports this past week, as well as the 100-week MA, the target for this week is likely to be the August low at 4292 and/or the next and decent weekly close support at 4258, which if broken would be an additional negative to the long-term trend.

The NASDAQ was the only index that closed in the upper half of the day's trading range on Friday, suggesting that further upside above Friday's high at 4520 will be seen on Tuesday. Nonetheless, it must be mentioned that the only reason the index closed near the highs of the day is that it gapped down on Friday on the "intra-day chart" (not on the daily chart) and the other indexes could not, meaning that a rally above Friday's high will not be of importance as closure of the "intra-day" gap is not a magnet.

The intra-day charts of the NASDAQ show resistance between 4570 and 4600 that based on the outlook for further downside during the week is unlikely to be broken, meaning that there is a high probability of the index getting below the August low at 4292 at some point this week.

My personal outlook for the NASDAQ is that the index will close around the 4258 level next Friday and then get down intra-week to the 200-week MA the following week but generate a positive reversal (a green weekly close), suggesting the move down would then be over.

SPX Friday closing price - 1880

The SPX made a new 15-month intra-week low and a 20-month weekly closing low on Friday and closed on the lows of the week, suggesting further downside below last week's low at 1857 will be seen this week. In the process, the index gave a new sell signal on the weekly closing chart, having broken below the double intra-week low at 1867/1871 and then closing below the August low weekly close at 1921.

The SPX is the only index that has so far broken the August lows, suggesting that for the moment the index will be used by the traders as the primary measuring stick to determine downside chart objectives as well as support levels likely to hold up.

To the downside and on an intra-week basis, the SPX shows decent support at 1820 (Oct2014 low) and then nothing until minor support is reached at 1737. On a daily closing basis though, the index is still showing decent (as well as pivotal) shot-term support at 1867. On a weekly closing basis, though, the index has no support below until the 1800 demilitarized zone is reached, with multiple supports at 1775, at 1782 and at 1815.

To the upside and on an intra-week basis, the SPX shows minor but short-term pivotal resistance at 1950. Above that level, resistance is found at 1993 and a bit stronger at 2020.

Having made a new 20-month weekly closing low last week (below important support levels) and the reasons for the break being fundamental (oil prices and Chinese market) and not likely to change this coming week, the SPX has a high probability of continuing lower until either the next important level of chart supports are found or the negative fundamentals change. The former is more likely to occur first and as such, the chart support picture is what the traders will be looking at this week.

The SPX has intra-week support at 1820 but since it is not as important as the 1867/1871 level was it could mean the traders may target that area and go for the stops below. The 200-week MA is currently at 1780 and that is a line that is unlikely to get broken at this time, but then again that line is only important on a weekly closing basis (Friday's). By the same token, there is quite a bit of previous daily close support between 1775 and 1815, suggesting that area, at least on a daily and weekly closing basis, will offer enough support to stop further downside at this time. Nonetheless, on an intra-week basis, and especially if the 1820 level is broken and some panic selling occurs, the traders could target the "general" support at 1700 before any short-covering or new buying occurs.

Probabilities favor the SPX generating a small intra-day bounce on Tuesday morning, perhaps up to the 1900 area, but then continuing lower for the next week and a half and the traders targeting the 200-week MA as the main objective, at least on a weekly closing basis.

The bears were able to make a strong statement on the charts last week (the first in 63 months) when important and pivotal support levels were broken convincingly. The statement was further corroborated fundamentally with the Chinese market officially giving a "bear market" signal and commodity prices also breaking support levels that suggest further downside will be seen. The action seen this past week, if confirmed this coming week with lower prices, will suggest that the 63-month uptrend (since the last correction in 2011) is over and that there will be no chance to renew the uptrend until at least October of this year.

The economic calendar for this coming week is "skimpy" at best with Housing Information and PPI being the only reports of consequence scheduled and on the earnings front only a few important companies reporting this week (JPM, NFLX, IBM and GE). As such, the traders are not likely to find any refuge from additional selling if oil and the Chinese market continue to head lower (likely).

Downside chart targets are clearly defined in all the indexes. The indexes seem to be mimicking the drop seen in 2011 and it needs to be mentioned that on that occasions all the indexes got close to giving a "bear market" signal (drop of 20% from the highs). With the Chinese market already giving a bear market signal and the other 2 main Asian markets being close to giving one as well, the probabilities suggest that the U.S. could (and likely will) get close to the 20% correction that is needed to generate such a signal (DOW down to 14680, SPX to 1708, and NAZ to 4184). With these chart targets in mind, it does strongly suggesting that the bears will be in control much of this coming week, unless some new and positive fundamental data comes out.