DOW Friday Closing Price - 42840
SPX Friday Closing Price - 5930
NASDAQ Friday Closing Price - 21289
RUT Friday Closing Price - 2242

How do I begin to explain the action seen this past week, with the indexes taking a big fall on Thursday and having a big rally on Friday, without any major fundamental changes occurring either day? I guess that to explain this action, it has to be said that uncertainty is extremely high and as such, volatility is high as well. It does have to be said that the "Trump" rally is over as the markets are back to the levels they were before it was announced that he had won the election. Nonetheless, that doesn't change the fact that Trump will be making some game changing decisions that could give the bulls or the bears some big ammunition once those promises get put in place (or not) and whether they work (or not).

Having said the above, the reason given for the fall of the indexes on Thursday was the Fed signaling that it may deliver fewer rate cuts in 2025 than originally thought and the reason for the rally on Friday were the "tame" inflation numbers that the PCE index signaled on Friday's report. Nonetheless, the strong losses and gains seen on those two days is likely trader manipulation due to the overall uncertainty.

Getting back to the charts, this is what was accomplished or not accomplished this past week. The DOW gave a sell signal and a failure signal on the daily closing charts and a failure signal on the weekly closing chart. In addition, it closed in the lower half of the week's trading range, suggesting further downside below last week's low at 42146 will be seen this week. Nonetheless, the index did generate a positive reversal day on Friday, suggesting the first course of action for the week, will be to the upside with a target of 43275 (on a daily closing basis), which is 435 points above Friday's close. If that occurs and then the index reverses and does go below last week's low, the 4200 level would be the target to be reached before inauguration day.

The SPX gave a failure signal on both the daily and weekly closing charts but no other signal was given. On the daily closing chart, the index reached a decent daily close support between 5864 and 5870 and bounced up from it, suggesting further upside with an objective of 5995 (on a daily closing basis) will be seen this week. That is a 65 point rally from Friday's close. It too, closed in the lower half of the week's trading range, meaning that if it goes below last week's low at 5832, the 5700 level would be the downside target before inauguration.

The NASDAQ generated a key negative reversal week, having made a new all-time intraweek high and then closing red, closing below the previous week's low, and closing in the lower half of the week's trading range, suggesting further downside below last week's low at 20913 will be seen this week. Nonetheless and like the SPX, the index generated a positive reversal day on Friday, suggesting the first course of action for the week will be to the upside with 21622 as the upside objective (on a daily closing basis), which is 332 points higher than the close on Friday. This index though, did not generate any kind of a failure signal on either the daily and closing chart, meaning that it remains the key index to watch. Any daily close below Thursday's close at 21110 would generate the failure signal on the daily closing chart and if that happens, a domino-like effect would likely ensue to the downside, with a minimum downside target of 20394.

The RUT was the big loser this week as a sell signal and a failure signal on both the daily and weekly closing charts occurred. In addition, the index fell 6.5% while all the indexes dropped less that 4% (from previous week's close to low of the week). This small cap action does suggest that unless Trump does tangible positive things after his inauguration, that the uptrend top in all indexes has been found.

This week being Xmas week, the indexes will trade half a day on Tuesday and be shut down on Wednesday. In addition, Xmas week by nature is a low trading volume week as traders tend to take the entire week off. As such, it is difficult to imagine the indexes doing everything (both highs and lows) that the charts suggest will happen. By the same token, the low volume could also help the traders that are trading, to manipulate the action which could suggest the volatility will be high again. Having said that, computers and algorithms are always in effect, meaning that it is highly unlikely that the levels of support and resistance given above will be broken. In other words, the action could be less than anticipated but not likely to be more than anticipated.

HSI Index generated the smallest trading range week since August and in the process, did not generate any signals of any kind on either chart. The index did close near the low of the week, suggesting further downside below last week's low at 19591 will be seen this week but on the daily closing chart, the 19700 level of established support held (closed at 19720 on Friday) and unless this area gets broken on a daily closing basis, the bulls remain with the edge (slight edge). Any daily close above 19864 would make the edge stronger and any daily close below 19560 would give the edge (slight edge) to the bears. Below 19420 would make the edge stronger. The intraweek chart does suggest that a drop down to 19469-19520 could be seen this week but from that level a bounce should occur. A rally up to 20361 is also likely to occur over the next few weeks. Until the Chinese government actually stimulates the economy (doesn't just talk about doing it) or negates the stimulus, it is unlikely the index will get out of this 800-point trading range (between 19520 and 20361) until after Trump's inauguration.

---

GOLD(Feb 2025 chart) generated a red week but then closed slightly in the upper half of the week's trading range, suggesting a higher chance of going above last week's high at $2683 than below last week's low at $2596. If Gold does go above last week's high, last week's low will become the needed/required retest of the 14-week low at $2560 and would open the door for either continuation of the uptrend or at least a retest of the high seen 2 weeks ago at $2761 (which was a successful retest of the all-time high at $2801. The probabilities favor Gold trading between $2735 and $2618 until the inauguration. It is unlikely that either side will generate any type of trend movement at this time.

OIL generated another uneventful week as it continued to trade within the parameters set during the past 6 weeks, between 66.61 and 71.48. Oil did get up to 71.44 but then turned around to close near the low of the week, suggesting further downside below last week's low at 68.42 will be seen this week. The levels to watch at 66.61 and 72.48 (same levels have been in place for the past 7 weeks. Those two levels are short-term pivotal. The two long-term pivotal levels are 65.27 and 78.46. The upside one does require positive fundamental news. The probabilities still favor the bears but it does not seem that this week anything of consequence will occur.

---