DOW Friday closing price - 11410

The DOW had a very uneventful week without clear direction trading in a narrow range of 124 points. Such a range coming on the heels of at 460 point range and closing near the highs the week before suggests that traders are uneasy about further upside and need additional positive fundamental news to push the index further upward. Nonetheless, the index did close higher than the week before keeping the recent up-trend intact.

The DOW is facing a week of relatively important news starting with the likely passage of the compromise with Republicans that will negate the tax increases due to occur January 1st. No tax increases will create the idea that the recovery seen up until now will continue. In addition, on Tuesday PPI, Retail Sales, and Business Inventories will be released and news-wise will probably be the most important day of the week.

On a weekly closing basis, resistance is decent at 11444, decent gain at 10578 and strong at the January 2000 high close at 10723. On a daily closing basis, resistance is decent to strong at 11444. Above that level, resistance is decent at 11642 and strong to major at 11723. On a weekly closing basis, support is very minor at 11193, decent at 11101, and decent at the 200-week MA, currently at 10960. On a daily closing basis, support is very minor at 11359, minor at 11114, and minor again at 11036. Below that, decent to strong resistance is found between 10979 and 11008.

There are many seasonal factors coming into play this week, starting with the fact that the index normally sees a "small" Xmas rally heading into the last week of the year. Nonetheless, in the past there have been a few exceptions to this rule when the index has generated a strong rally throughout the year and profit taking by hedge and mutual funds is seen. As such, the seasonal factors may not be adhered to this year.

From a purely chart perspective, the probabilities seem to favor the bulls inasmuch as the DOW has stayed near the highs made 6 weeks ago and for the last 2 weeks no selling of consequence has been seen. In addition, both the SPX and the NASDAQ have made new highs for the year which would suggest the DOW will as well.

This coming week is likely to be pivotal inasmuch as the previous highs at 11451 are very close by and the smallest nudge would likely cause a break of resistance. On the other side of the coin, the very small trading range seen this past week puts last week's low (11327) also close by and at risk of being broken as well. If that happens, "strong" profit taking should be seen as it would increase the resistance at 11451 making it close to impossible to break on a month where by nature volume and open interest go sharply down.

As of this writing it is impossible to predict how the index will react this week as it truly depends on the economic reports coming out. By the same token, some form of decision should be seen as early as Tuesday as by then most of the important reports for the week will be out. Either way, though, it is not expected that the next 4 weeks will bring much action as December is not usually a month where big decisions are made.

To encapsulate the words up above, last week's trading range between 11327 and 11451 are likely decide the direction for the next 4 weeks. A break above or below those levels will probably cause the index to move in that direction until the beginning of the year when the first quarter earnings reports come out.

NASDAQ Friday closing price - 2638

The NASDAQ outperformed all the other indexes this past week generating a 35-month high that puts the index within 200 points of the pre-recession highs seen in 2007. The index has once again returned to the leadership role to the upside that it held in 2009/early 2010, and with no resistance above for another 60/70 points, the possibilities of the index carrying the other indexes upward is high.

The NASDAQ should see immediate follow through on Monday, having closed on the highs of the week and with no expectations of negative information coming out during the weekend or on Monday.

On a weekly closing basis, resistance is decent to strong between 2692 and 2706. Above that level, major resistance is found at 2810. On a daily closing basis, decent to strong resistance is found between 2719 and 2724. Above that level, there is no resistance whatsoever until the 2800 level is reached. On a weekly closing basis, support is minor at 2518. Below that, there is minor support at 2445, very minor at 2373, and decent to strong between 2212 and 2239. On a daily closing basis, support is now minor to decent at 2495 and decent to strong between 2460 and 2468. Below that, there is minor support at 2437 and then decent at 2400.

The NASDAQ has open space above and on the chart there is nothing to stop it until the 2700 level is reached. With no news due out Monday, it is expected the index will once again over perform the other indexes starting on the opening. Like with the DOW, last week's low (2584) will likely cause some selling if broken. On the daily chart, though, the previous high seen November 9th was 2593 and the index also saw a minor blip downward this past week at 2593 as well. If that level is broken, it is possible that disappointment will follow and selling begin.

There is still an open gap between 2511 and 2535 that will become a magnet if the index starts to falter. At this moment, traders are not concentrated on the gap due to the strong bull-run the index is enjoying, but if any weakness is seen, the 2500 level will become a strong objective.

The probabilities favor the bulls this week and it is possible the index will trade between 2600 and 2700, mimicking the trading range of 105 points seen the previous week.

SPX Friday closing price - 1240

The SPX made new 26-month highs this past week getting above the 1227 high seen in April and closing above the previous weekly high close at 1226 level on Friday. The index continues to go higher reluctantly due to the continuing financial problems the world is facing, but having been dragged higher by the other indexes over the past 6 months the index has now broken resistance levels of some consequence and could see some additional technical buying coming in.

The SPX does have some old resistance levels above, unlike the NASDAQ, and is not likely to go up as aggressively as that index might, even if follow through buying is seen.

On a weekly closing basis, resistance is minor at 1248 and then decent to strong between 1292 and 1298. On a daily closing basis, resistance is minor at 1252/1255 and again at 1268. Above that level, resistance is decent to perhaps strong up between 1300 and 1305. On a weekly closing basis, support is minor at the 200-week MA, currently at 1190. Below that level there is no support until the 50-week MA is reached, currently at 1121. On a daily closing basis, support is very minor at 1223 and decent to perhaps strong between 1178 and 1184. Below that, there is no support until minor support is reached at 1137 and again at 1125.

The only resistance close by in the SPX around the 1250 level is from 2005 and therefore not very dependable. By the same token, the index did trade "around" the 1250 level for a period of 5 months back in 2005, so it might be used by the traders as a stop point, especially since December is not usually a month that generates much decisive movement.

As far as support is concerned, there is not much support of consequence established until the 1182 to 1200 level is reached. As such, any weakness taking the SPX below last week's low at 1222 would likely take the index down to the 200-week MA, currently at 1186.

The SPX did close on the highs of the day/week on Friday and the probabilities strongly favor follow through to the upside with the immediate objective of reaching the 1248/1250 level. Only if the index opens lower on Monday, due to some fundamental piece of news from either Asia or Europe, will the index be at risk of not going higher at the beginning of the week.

Possible trading range for the week could be 1250 - 1227.

The indexes are giving mixed signals once again with the DOW having problems getting above the recent highs, the SPX breaking out but with limited upside objectives, and the NASDAQ showing high probabilities of going higher substantially before running into resistance. It is evident, though that the marketplace is still indecisive as the economic news continues to point to higher numbers but the status of the worlds financial problems suggests that the market could be facing a precipice ahead.

This week does have some important economic news coming out, with PPI, Retail Sales, and Business Inventories on Tuesday, CPI, Capacity Utilization, and Industrial Production on Wednesday, Initial Claims, Housing Starts and Philadelphia Fed on Thursday, and Leading Economic Indicators on Friday. With the traders sitting atop what could be an inflated balloon ready to pop and the end of the year fast approaching, catalysts that could cause the house of cards to fall abound. As such, expect continued jittery and uneventful trading, but with an upward bias as long as the fundamental news is not negative.

Probabilities do favor further but somewhat limited upside for the next 2 weeks, keeping in mind that December is generally an up month but not aggressively so.