DOW Friday closing price - 10997

The DOW was able to get up to the 11000 area on Friday after failing several times during the week. The lack of economic news as well as the positive momentum has to be considered the main reasons for the success. In so doing, the index was once again able to generate a new 18-month high weekly close and keep the rally going.

This coming week, though, could be totally different as it is full of economic news of consequence as well as a slew of earnings reports for the new quarter. With an overbought condition, any slight negative could be a catalyst for a strong profit taking binge.

On a weekly closing basis, resistance is psychological at 11000 and somewhat stronger at 11110 where the 200-week MA is currently located. 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 at 10898 and again between 10836 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.

The week of reports starts out Monday afternoon after the close with the earnings report for AA. It has often been stated that AA is a leading indicator for direction for the market and that certainly was true in January when the company reported slightly lower earnings than expected (+.05cents vs. the expected +.06c). One week later the DOW began its most recent downside correction from a high of 10730 to the 9835 low seen February 5th. As such, traders will be waiting in anticipation to what the AA report says (anticipated to be +.10c).

On Wednesday, the CPI and Retail Sales reports will come out. The CPI report is not likely to have much impact but Retail Sales is likely to be a "biggie" this time around as it is called to show a strong increase from the previous month's number (+1.1% vs. last months +.03%). It is important to note that over the past 10 years the top number for the report has been +1.7% (only seen above 1.5% twice in the last 10 years) and any month that the number was above 1%, the following month the number was lower. As such, it has to be said that the expectation for a Retail Sales number of +1.1% is already reaching lofty areas of sales. In addition, if the number comes in as expected, the expectations for next months number will likely be lower. It is therefore probable that the number could be a negative catalyst either way.

From a chart point of view, it is now highly probable the DOW will get up to the 200-week MA, currently at 11110. In fact, with Friday's close at the highs of the day and with no news due out until Monday afternoon, the probabilities favor the index going up to that number on Monday, thus fulfilling the upside objective early in the week as the traders would then wait for the economic and earnings news for the week to determine any further movement.

On the downside, a daily close below 10898 or an intra-day drop below 10844 is now likely to be a negative catalyst. That was the intra-day low and low close for last week (made on Wednesday) and therefore any break below that level or close below that close would likely signal that a top has been found.

With such an important week of earnings and economic reports, it is likely that the sleepy treading water type of action seen the past 2 weeks is over and that some decisive action will be seen. A red close next Friday (below 10997) will likely signal that a top has been found.

NASDAQ Friday closing price - 2454

The NASDAQ enjoyed strong buying this past week, mainly on the coattails of two stocks (AAPL and AMZN) that had strong retail news made available. The index was able to slice through a minor to decent weekly close resistance at 2413 and get up to a very important weekly close resistance at 2454. As such, this coming week is likely to be one of the most important weeks for the index in the last year.

The NASDAQ had little trouble this past week as the index promptly established itself above 2413 and did not look back, making 2414 the low of the mid-week mini correction. Nonetheless, the index now finds itself reaching levels that are of great consequence in the overall outlook of the market. As such, it is likely the index will need strong fundamental help to, in the form of positive economic and earnings reports, ton continue the rally.

On a weekly closing basis, decent to strong resistance is found at 2454. Above that level, major resistance is found at 2523. On a daily closing basis, strong resistance is found at 2454, minor resistance at 2472, and major resistance 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 2431, decent at 23.97/2398, and minor again at 2374 and 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 was once again the strongest index having moved up this past week a total of 2.2%, compared with 1% or less in the other 2 indexes. Much of this was due to the strong showing of AAPL after the very successful release of the new tablet, as well as of the bullish run that AMZN saw at the end of the week. It must also be mentioned that the NASDAQ has generated a 14% rally over the past 8 weeks, this rally having occurred without one single downward blip. Reaching levels where major selling was found in the past will likely mean the index can only go up if the reports this week are positive.

The NASDAQ has decent to strong intra-week and daily and weekly closing resistance at 2454, with the weekly close resistance being the most important. Nonetheless, having closed on the high at 2454 on Friday it seems probable that follow through on Monday will be seen, causing the index to break that daily close resistance, and thrusting the index up to the strong psychological resistance at 2500. As such, Monday's close will likely be considered short-term important.

With so many earnings and economic reports due out this week, it is difficult to predict exactly what will occur. Nonetheless, with no news due out on Monday, how the NASDAQ closes on that day will set some important chart parameters for the week, and likely set the tone for how the reports will be evaluated.

On the downside, the most recent daily low close at 2431 is likely important and if broken would likely generate some selling. Nonetheless, a close below 2397 will be a sell signal that should determine that the index has found its top.

SPX Friday closing price - 1192

The SPX continued its upward climb with yet another 18-month high weekly close. Nonetheless, the index did not get up to its main objective at 1200. With absolutely no previous resistance until minor resistance at 1200 is reached, it was surprising that the index did not accomplish its goal.

Since its corrective low at 1066, the SPX has shown 9 weeks in a row of higher lows than the previous week and a rally of slightly over 10%. It is likely that its objective is the 200-week MA, currently at 1225, as the resistance at 1200 is mainly psychological.

On a weekly closing basis, resistance is minor at 1200, and decent at 1225. On a daily closing basis, there is minor resistance at 1213 and stronger at 1255. On a weekly closing basis, support is minor at the previous high weekly close at 1145 and then nothing until strong support at the previous weekly low close at 1066. Below that level support is decent at the 100-week MA, currently at 1038. On a daily closing basis, minor support is found at 1189, at 1169, at 1166, and at 1160. Below that, support is non-existent until the 50 and 100-day MA are reached between 1125 and 1130.

It is evident that the SPX, as well as the other indexes, have the momentum going for them to the upside. By the same token, it is also evident that the slightest snag or obstacle could cause a strong move down as no support levels of consequence have been built. It must be mentioned that the upward gains seen over the past 2 weeks have been on the lowest volume seen since the Xmas week. As such, these gains must be considered fragile.

Like with the other indexes, it is not likely the momentum will stop until such a time that some negative catalyst is found. With no news coming out on Monday, further gains should be expected, with the 1213-1225 level being the most likely objective. Nonetheless, once the economic and earnings news start coming out on Monday afternoon, things could get dicey.

Since February 8th (9 weeks), every low daily close in the SPX has been higher than the previous low close and therefore the most recent low daily close at 1189 must be considered a possible sell signal trigger, even though it is not considered an important support level.

The indexes continued their upward momentum this past week as there were no catalysts (news items) scheduled, and none came out. Nonetheless, that is about to change as this coming week is full of economic and earnings reports news. The most important report this coming week is likely to be Retail Sales on Wednesday morning. The expected number is +1.1% and that is already a lofty number, compared to other numbers over the past 10 years. As such, there is more risk to the bulls than the bears as a higher number than the expected one is unlikely to be seen.

On a chart basis, the DOW and the SPX are now reaching chart resistances of consequence, in the form of the 200-week MA's, and the NASDAQ is also nearing a level (2500) that is of major psychological importance. As such, it can be expected that technical selling is likely to be seen this week, no matter what the earnings and economic reports say. It also has to be mentioned that the last 2 weeks the volume has been the lowest since Xmas and that does not support continued upward movement without positive news.

It must also be mentioned that the Elliot Wave theory states that a major top will be seen any time from now until the first week of May. With this week having quite a few important reports, as well as with the indexes near major upside objectives, it would not be surprising that this is the week a high is made.