DOW Friday closing price - 10927

Once again the DOW generated a new 18-month weekly closing high, closing 77 points higher than last week's close and within shouting distance of the next major psychological resistance at 11000 (got up to intra-week to 10956), as well as of the 200-week currently at 11110.

The DOW was strong all week but it is likely the bulls held back from making new 18-month intra-week highs due to the shortened holiday week as well as the uncertainty surrounding the Unemployment number that was coming out on Good Friday, when the market was closed. Nonetheless, the index did close near the highs of the week and with the Unemployment number coming out as expected on Friday, the probabilities favor the recent up-trend continuing for a bit more.

On a weekly closing basis, resistance is minor at 10941 (from weekly closing highs seen in 2005). Above that level, the 11000 area is psychological resistance and the 200-week MA is currently at 11110. On a daily closing basis, resistance is minor at 11027 and a bit stronger at 11143. On a weekly closing basis, support is minor to decent at 10325/10329 and strong at 10012. On a daily closing basis, support is minor to decent between 10841 and 10857. Below that level there is no support until decent support is found at 10380/10397. Below that level, resistance is decent at 10282 from a previous low close as well as from the 100-day MA.

After the Unemployment report came out on Friday, the DOW futures were seen trading up around 10960. As such, the probabilities of the index getting up to 11,000 and perhaps even as high as the 200-week MA, currently at 11110 are high. Nonetheless, it must be mentioned that the high for all of 2005 (up until Feb06) was 10984. From that high, which was made the week of March 7th, the index fell all the way down to 10,000 over a period of just 5 weeks.

With such subdued reactions to the continued positive fundamental news, as well as very low volume of trading seen over the past few weeks, it seems highly likely that one of 2 resistance levels above (2005 high at 10984 or 200-week MA at 11110) will be the high for the move. The probabilities do favor the latter as the old resistance from 2005 is probably not going to be respected at this time.

The daily chart of the DOW is showing a possible short-term flag formation that if broken (a rally above 10956) would project a rally up to 11084. With the index likely to open on Monday at or above 10960 (based on the futures trading on Friday afternoon) it is likely that Monday and Tuesday will be decent to strong up-days. By the same token, if the index does not open higher on Monday, Friday's high at 10956 might be seen as a double top, using the 10955 high seen the previous week.

On the downside, the recent low at 10816 is considered decent support. With the DOW having come up 8 weeks in a row without going below the previous week's low, if such an event happens, there could be a sharp move down as no support of consequence has been built on the way up. There are no economic reports of consequence this week and though the new earnings report quarter starts on Wednesday, the important earnings reports don't start coming out until the following week. As such, this coming week is likely to be more technical trading than anything else. I t is probable the DOW's direction for the week will be decided as early as the first 30 minutes of trading on Monday.

NASDAQ Friday closing price - 2403

Though the NASDAQ made a new 18-month weekly closing high this past week, the index was unable to get above, or even close, to the previous week's intra-week high at 2430. In addition, the decent to strong daily and weekly close resistance between 2411 and 2415 (2413 on weekly closing basis) continues to hold firm, providing continued support to the idea that the index has found a top to this 1-year rally.

The NASDAQ did have a positive reversal day on Friday with lower lows and higher highs than the previous day. The reversal seems to suggest further upside will be seen this coming week, but if the index is unable to get above Friday's high at 2423, or more importantly above the previous week's high at 2430, the reversal day on Friday will be seen as a successful retest of the highs, thus confirming that a top has been found.

On a weekly closing basis, minor to decent resistance is found at 2413. Above that level, decent resistance is found at 2453 and major at 2523. On a daily closing basis, decent to strong resistance is found at 2413/2415, strong resistance at 2453, and major at 2550. On a weekly closing basis, support is minor at 2326 and again at 2290. Strong support is found at 2239 and a bit stronger at 2210 (200-week MA). Below that level strong support is found at 2141. On a daily closing basis, support is minor at 2395, at 2374 and again at 2362. Below that there is no support until minor support is found between 2282 and 2288 and minor again at the 50-day MA, currently at 2270. Below that level, support is strong between 2200 and 2213.

The NASDAQ has fulfilled all of its upside objectives possible (under the guise of a recovery) to the levels prior to the recessionary period. Any further upside from here, above 2454 on a daily closing basis, would put the index in a bull rally unlike any seen before except for the Dot.com rally of 1998-2000. This past week the index basically "treaded water", though the higher weekly close keeps the recent up-trend intact.

It is very evident that the daily and weekly close resistance between 2411 and 2415 is important to the traders. It is especially important since it is not "old" resistance but resistance generated just prior to the big drop in price in August/September 2008. As such, any close above that level any day this week, would tip the scales to the bulls. By the same token, the index now shows 2 closes this week at 2395 and 2398, which means that any close this week below 2395 would tip the scales to be bears. With only a 20 point daily close trading range between short-term bullish or bearish, it is likely that decision will be made as early as Monday.

SPX Friday closing price - 1178

The SPX was able to generate a close above the 2001 high weekly close at 1173 and with that close began erasing any comparison to those old resistance levels. As such, the probabilities of the index getting up to 1200/1223 (resistance levels from 2005 as well as the 200-week MA) have increased.

The SPX, contrary to the DOW and the NASDAQ does not show "any" previous resistance close by and therefore should lead the way up if the indexes are heading higher.

On a weekly closing basis, there is minor to decent resistance at 1212 and again at 1222 (both weekly closing highs from 2005). In addition, the 200-week MA is currently at 1223. On a daily closing basis, resistance is minor at 1213 and a bit stronger at 1255. On a weekly closing basis, support is minor at 1102 and decent at 1066. On a daily closing basis, support is minor at 1169, 1166, and again at 1160. Below that level there is minor do decent support at 1150 and then nothing until decent support is reached between 1091 and 1095.

The 1200 level must be considered psychological resistance but in reality resistance is not found until 1213 (high from 2005) to 1223 (200-week MA) are reached. With the closest resistance being 35 points from Friday's close, the SPX should outperform percentage-wise all other indexes.

By the same token, if the SPX shows any weakness on Monday with any kind of a red close, the disappointment will be palpable, especially if the index does not get above Friday's high at 1181, since that would generate a double top at that price. Support is minor but copiously layered at 1169, 1166, and 1160. Any daily close below 1160 will bring in strong selling.

Like with the DOW, it is likely that the first 30 minutes of trading on Monday will give the direction for the week. The probabilities favor the upside and if that is the case, the SPX should be the strongest index all week.

This coming week there are no reports due out that can be considered a possible catalyst for the indexes. In addition, though the new earnings report quarter starts this week, there are no major companies reporting until the week of April 12th. As such, trading for the next 5 days is likely to be based on momentum as well as charts. With both the DOW and the SPX trading so close to psychological levels (11000 and 1200) it is probable those levels will be touched as they will tend to work as magnets.

The Unemployment report came in a slightly bit lower than expected (+162k vs. expected +184k) but it was the first month that positive growth was seen since the recession began. As such, the bulls will use that number as proof that things continue to get better and try to push the indexes higher this coming week.

Nonetheless, it must be mentioned that 3 weeks ago the indexes arrived at these same levels (SPX got up to 1170 on March 17th) and have not been able to generate much further upside (SPX only up 8 points since) in spite of the fact that most (if not all) economic reports continue to show an improving economy. It is therefore evident that some selling or profit taking is being seen. All it will take is a negative catalyst, albeit fundamental or technical, to cause a strong profit taking binge. It is not expected that such a catalyst will be seen this week.