DOW Friday close at 10520

The DOW once again received positive economic news and was able to generate a new 14-month weekly closing highs. The new highs are suspect as the came on a week with extremely low volume and participation by traders. Nonetheless, there has been no obstacles found or reasons to sell fundamentally, and therefore further upside is likely to continue until the new economic and earnings reports come out in January.

It must be noted, though, that the DOW was the laggard this past week as both the NASDAQ and the SPX outperformed the index. As such, upside movement is likely to continue to be labored and limited. On the other side of the coin, with few reports of consequence due out this coming week, and no chart resistance above, there is no reason to expect any downside action this coming week.

On a weekly closing basis, there is no resistance until decent resistance at the 200-week MA, currently at 11700, is reached. On a daily closing basis, there is very minor resistance at 10861 and a bit stronger at 11168. Psychological resistance will be found at 11100. On a weekly closing basis, minor support is found at the previous week's close at 10329. Below that level there is no support until the 100-week MA currently at 10000, is reached. At that level, there is also a previous weekly high close at 9996 that is likely to add strength to that support. On a daily closing basis, there is decent to strong support at 10310 as well as at 10286. Below that level there is minor support at 10197 and then nothing until the 50-day MA currently at 10,060.

The DOW has no previous resistance of any consequence until it reaches up to the 11000 level. Even then, the resistance there is considered to be minor to decent at best. With no resistance of consequence and the bears on the sidelines awaiting new economic and earnings report in January, it is impossible to anticipate how much further the index could go up this week. It is unlikely, though, that without further news of consequence that any of the indexes will get the kind of buying needed to generate a strong move up, but with no resistance above, it could happen.

On the other side of the coin, the bears are totally on the sidelines awaiting the reports in January and therefore no downside movement of any consequence is likely to occur, unless the dollar strengthens again. The Dollar suffered a bit of a relapse this past week due to the strength shown in the Crude Oil market (low inventory report). Though it is expected that the Dollar will hold on to its strength and likely continue to move higher next year, a small correction to the recent move up would not be unexpected, especially if the Crude Oil market holds on to its strength.

The intra-day 60-minute chart shows short-term but important support at 10438 and again at 10405. As such it is unlikely either of those two levels will be broken. If they are broken, though, then it is likely there is some end-of-the-year book squaring or profit-taking is occurring and a small corrective week will be seen. Nonetheless the probabilities favor continued but limited upside. Using last week's range of 192 points and considering the bulls will be attempt to continue to keep the market moving higher, a possible trade range between 10438 and 10630 could be seen.

Either way, though, this is not likely to be a week where new buying or selling of consequence will occur.

NASDAQ Friday Close at 2285

The NASDAQ started the week with a gap above the 200-week MA and not only held on to its strength but closed substantially above that level and on the highs of the week. The break above the 200-week MA is likely a strong signal that the index is heading substantially higher. Nonetheless, because of the low volume/participation holiday week, such a consequential breakout is somewhat suspect, especially since the other indexes did not follow suit with the same intensity.

Nonetheless, the NASDAQ must be considered the leading indicator of the market as it has broken above levels of resistance that have been of great consequence in the past. Such a breakout, if confirmed with fundamental news in January, will be considered a clear sign that a bull market is now in place and that further upside of consequence will be seen in 2010.

On a weekly closing basis, resistance is decent at 2333, minor at 2413, and strong at 2453. On a daily closing basis, resistance is minor to decent at 23.90 and strong at 2453. On a weekly closing basis, there is minor to decent support at 2239 and decent support at 2212. Below that level minor support is found at 2138 and then nothing until strong support at 2045/2048. On a daily closing basis, support is decent at 2180 and again at 2173. Support is again minor at 2146 and decent at 2138.

Based on the break above the 200-week MA and close above all the weekly closing resistances between 2212 and 2252, generated over the past 5 years, the index is now in a "runaway train" category. Having closed on the highs of the week on Friday it is likely the buying in the market will continue to be concentrated in the NASDAQ this coming week, with the first objective being an intra-day high seen September 19th 2008 at 2318. That level cannot be considered a resistance of consequence but with the low volume and participation being seen these last 2 weeks of the year, it is likely that minor resistance will hold the rally temporarily or at least until the New Year starts.

It also must be mentioned that the low volume and participation will likely mean the breakout above the 200-week MA seen this past week will be confirmed with another high close next Friday. Such action will need to be taken with a grain of salt as fundamental confirmation is needed to confirm such a major breakout, and that won't begin to happen until the second week in January.

Nonetheless, for this coming week the NASDAQ is likely to hold on to most of its recent gains. With the decent support now found between 2239 and 2252, on a weekly closing basis, a possible trading range for this coming week is 2252-2318.

S&Poors 500 Friday close at 1126

The SPX was able to get and close above the resistance at 1120 that on a PE ratio basis most analysts had been predicting would stop the index from going higher this year. In addition, the SPX did break out of a 6-week coil formation between 1086 and 1119 that does give a 1154 objective. With no resistance on consequence until that objective is reached, it is likely the index will continue higher this coming week. Nonetheless, it must be mentioned that going all the way back to 1996, 2001, and 2004, resistance on a weekly closing basis starts at 1132 and builds in strength until 1157 is reached. It must also be mentioned that on an intra-month basis, there is very strong resistance between 1171 and 1191 that is not likely to get broken without a strong correction occurring first. As such, further upside from here will be limited, at least in this index.

On a weekly closing basis, decent to strong resistance is found every 10 points between 1132 and 1157. Above that level, resistance is also strong at 1164 and 1173. Above that level there is no resistance whatsoever until the 200-week MA, currently at 1230, is reached. On a daily closing basis, there is no recent (last 2 years) visual resistance until minor to decent resistance is reached up at 1166. On a weekly closing basis, support is minor at the most recent low close at 1102. Below that the 100-week MA, currently at 1072, must be considered decent support. Below that level there is no support of consequence until 1036 is reached. On a daily closing basis, there is decent support at the bottom of the coil formation between 1087 and 1091. Below that level there is no support until decent support at 1043/10044. Strong support is found at 1025/1036.

Having broken above the 6-week coil formation the SPX should continue higher until the objective of the coil is reached up at 1154. Nonetheless, the resistance levels in the SPX from the past 13 years will begin to become strong obstacles as the index moves up. In looking at the monthly chart of the index, it is evident that the 1171-1191 level will be major resistance as on 3 different occasions (1996, 2001, and 2004) that level stopped the rally for several months and did create a decent to strong correction each and every time. It is important to mention that on 2 of the 3 occasions, the index was in an established bull market, as it seems the index is in now. As such, the fact that the index is now likely in a bull market should not stop a correction from occurring once those levels are reached.

With such a strong breakout close on Friday, further upside should be seen this coming week. The top of the coil at 1119 should act as support. Having had a 21 point trading range last week, a probable trading range for this week would be 1119 to 1140.

The market received more positive news this week as well as a minor correction in the strength of the dollar. This action caused all the indexes to make and close at new 14-month highs. Once again the market is facing another short week with low volume and participation. Nonetheless, none of the indexes have any resistances close by and should have less of a problem continuing higher than they had this past week.

The bears have no reason fundamentally or technically at this time to short this market and most selling that will be seen this week, if any, is likely to be from profit taking or end of the year book squaring. Nonetheless, with such low participation anything is possible as the market can be manipulated at times like this.

Consumer Confidence and Initial Claims are the most important reports this week but neither is likely to have much impact. Both of these reports are anticipated to be better than the previous ones and if that happens, it will continue to give the traders reasons to buy. Nonetheless, ff they come in worse than anticipated they are not likely to generate much new selling. A calm week with an upward bias is expected.