DOW Friday close at 10270

The DOW closed out the week above the 100-week MA making it a possible breakout of that line. In addition, the index closed out the week near the highs of the week increasing the chances of further upside being seen this coming week. Nonetheless, the DOW did show an inability to go much above the 10300 level (general resistance) and closed out the week underneath that price. As such, this coming week is still in question regarding the direction of the index for the rest of the year.

The DOW was the leader of the indexes this week and that means that most of the buying was concentrated in the blue chip stocks. With so much of the bargain buying having been accomplished, the bulls are now starting to concentrate their attention into the stronger stocks.

On a weekly closing basis, there is no resistance whatsoever until the 200-week MA currently at 11200 is reached. On a daily closing basis, there is minor resistance at Wednesday's close at 10291. Above that level there is nothing until minor resistance is reached at 10851. Stronger resistance is found at 11143. On a weekly closing basis, decent support is now found at the most recent low close at 9713 and again at 9488. On a daily closing basis, there is minor support at 10197, again at 9996 and a bit stronger at the 50-day MA currently at 9855.

The DOW continues the up-trend and has shown no definitive signs that it is going to stop anytime soon. The rallies continue to be on very low volume, though, thus showing that further upside will continue be labored and difficult to accomplish. Nonetheless, with no economic or earnings-wise negatives being seen the bulls continue to dominate the market preventing the bears from making a stand of consequence.

The DOW is now at the last possible resistance left. Indexes, such as the DOW generally have support/resistance levels 300 points below and above the psychological number (in this case 10,000). As such the 10300 level must be considered a resistance level and the only resistance of any consequence left. The 9700 level of support held up well, but then again with the index being in an up-trend, that was no surprise. The 10300 level is a big question mark regarding its strength, and only offers minimal and/or general resistance. Nonetheless, that level did hold up this past week, even though the index did get up to 10341 on Wednesday, it closed below that line at 10291, and on Friday the weekly close was also below that level at 10270. As such, it cannot yet be said that the resistance level has "not" held up.

It is evident, though, that with the DOW closing near the highs of the week and only 30 points below the 10300 level, that something of consequence will happen very shortly. Evidently if the index continues higher this coming week, the buyers will have an easy go of it as there is no resistance whatsoever until the 10851 daily close is reached, and even then that is a minor resistance. As such, any follow through this week could generate an additional 10% rally in the index with the 11000-11100 area as the objective. By the same token, any weakness at this point would likely be indicative that the index has reached a top, especially if the index is unable to go up any further in spite of all the good news that has been coming out. If that is the case, the traders will likely take profits and start generating downside movement. On an intra-day basis, any breach of 10341 or a close above 10300 will have to be considered a strong positive. By the same token, any red close on Monday in the red will likely be considered a negative.

The week starts off with an important economic report on Monday in Retail Sales. It is anticipated the report will come in at +.9% versus last months at -1.5%. Retail Sales has been one of the key issues during this particular recession as unemployment has skyrocketed and expected to continue higher. As such, the purchasing power of the populace is not expected to rise much, keeping a lid on profits of companies. Business inventories, a "C" class report, will also be coming out on Monday at 10:00am. Nonetheless, that report is not likely to have much impact. On Tuesday, though, Industrial Production and Capacity Utilization are due out before the opening, and those reports will also have an impact making this week into a week that much is likely to be decided in the first 2 days of the week.

Contrary to most weeks, the first two days of the week will be very important and could determine the trend for the rest of the year. As such, it is difficult to determine at this time what the probabilities are.

NASDAQ Friday Close at 2167

Like the other 2 indexes, the NASDAQ also closed in new 13-month weekly closing highs, breaking above the previous high weekly close at 2157. Nonetheless, the index tried on a couple of occasions this past week to get above the 13-month daily closing high at 2176 but so far has failed to accomplish that.

The NASDAQ did generate a weekly gap this past week between 2118 and 2128 and that is likely to act as a magnet if any weakness is seen. Nonetheless, having closed near the highs of the week, further upside is the most likely event, with the 200-week MA at 2210 as a possible objective.

On a weekly closing basis, resistance is strong at the 200-week MA currently at 2210. In addition, there is a previous weekly closing low of consequence at 2212, giving that area the tag of major resistance. On a daily closing basis, resistance is very strong between 2173 and 2173. Above that level there is no resistance on the daily closing chart until 2165/2174 is reached. Resistance at that level must be considered decent. On a weekly closing basis, support is now strong at 2045/2048, and decent at the 100-week MA currently at 2000. On a daily closing basis, support is minor at 2149, minor to decent at 2099, and strong at 2045/2048.

The NASDAQ continues to be the index to watch for clues as to what the indexes will do from this level. With very strong weekly close resistance between 2175/2185, dating back to the last bull market in 2003-2005, as well as the major 200-week MA at 2210, it makes the NASDAQ into the only index with clearly defined levels that can be depended on. In addition, the index also has a strong previous low weekly close from March 2008 at 2212, giving that level much added strength. As such, it is likely that the NASDAQ will be the index the traders watch to decide what to do.

It is also important to note that during the last 9 weeks the NASDAQ has not done anything of consequence to the upside. On September 23rd the index had an intra-day high of 2168 and on Friday (9 weeks later) the index closed at 2167. Having gone 9 weeks without any upside of consequence (a drop of 1 point), in spite of the fact that 85% of all economic and earnings reports have been positive during this period of time, has to be considered a negative rather than a positive.

This coming week will be quite important as there are several reports early in the week that are likely to give a more defined direction to the traders. Nonetheless, it is likely that even with good reports the upside is limited, as the resistance above is not one that will likely be broken easily. Nonetheless, on the downside, drops down to close the open gap between 2118 and 2118 will be swift if the index shows any weakness. In addition, there is no support of consequence until the most recent low weekly close at 2045 is reached, As such, any weakness could generate a strong down move, whereas the upside will continue to be labored and difficult.

Therefore, there are 2 possible scenarios looming for this coming week. Scenario 1) If the reports are positive and the indexes rally, the NASDAQ is likely to get up to the 200-week MA at 2210. Under that scenario, the possible trading range for the week could be 2150 to 2210. Scenario 2) if the reports are bearish it is likely no further upside will be seen and a big trading range between 2168 and 2045 will be seen.

S&Poors 500 Friday close at 1093

The SPX had a bullish week generating a new 13-month weekly closing high as well as breaking and closing above the 100-week MA currently at 1090 (closed at 1093). Both of these actions could be signaling further upside if things are confirmed this week with new intra-week highs as well as higher closes.

On the negative side, though, the SPX was failed to follow through on Wednesday's new 13-month high daily close at 1099 (previous high close was 1098), closing below that level on both Thursday and Friday. This action certainly confirmed the 1100 level as a valid and strong resistance. It is now possible that if the index closes below 1087 on Monday, that a double top on the daily closing chart will be set.

On a weekly closing basis, there is no recent resistance until the 200-week MA currently at 1243 is reached. Nonetheless, going back to 2004, some resistance may be found at 1157. On a daily closing basis, there is now decent resistance at 1098/1099. On a weekly closing basis, support is decent at 1036 and strong at 1025.On a daily closing basis, there is minor support at 1087, decent support at 1043/10044, minor support at 1036, and strong support at 1025.

Traders seem to be closely watching the 1100 level as an important pivot point. The index has gotten above that level now on 3 occasions but failed to close above it even once. As it is, it is considered a psychological resistance as well as the general area where the 100-week MA is currently located. Having reached that level, though, and having closed just a couple of points above the 100-week MA (currently at 1090), if the index fails here and closes lower next Friday, it will be seen as a successful retest of that line.

Like with the other indexes, the SPX has accomplished all upside objectives and now is at a decision point that will likely determine the direction during the rest of the year. If the index is able to close above the 1100 area any time this week, there is nothing to stop the index from getting up to the 1157 level which was a weekly closing high back in 2004. Nonetheless, it is possible that if a breakout does occur, the index could get up to the 1243 level (200-week MA) because there is no resistance on any chart prior to 2004.

By the same token, if the index heads lower and closes below 1087 any day this week (before a new closing high is made) then a double top will be in place on the daily closing chart. Such a double top could generate a move down to the 1000 level before the end of the year.

Like with the other indexes, Monday could be the day this gets decided.

The charts of all 3 indexes have been fulfilled and now it is likely that whatever direction is taken this week will be supported for the rest of the year. In addition, this decision is likely to be made even before the opening bell on Monday as the Retail Sales report is due out on Monday at 8:30am.

Retail Sales is, and has been, a big key to the recovery as it signifies discretionary purchasing power of the populace. Without that purchasing power increasing, profits will likely stagnate at these high levels as most companies have already cut their expenses to the nth degree, making further upside unlikely unless sales increase. It is expected that Retail Sales will show a positive number this month (+.9%) after last months down number at -1.5%. With the indexes showing positive momentum, it is likely that any number that comes out as expected or better will tip the scales in favor of the bulls. By the same token, any negative surprise would likely bring the bears out in masse to defend the resistance levels that the indexes find themselves at right now.

As such, it is impossible as of this writing to give any probability numbers on what will happen this week. Nonetheless, it is highly likely that whatever the indexes do on Monday will carry forth the rest of the year.