DOW Friday closing price - 10198

On a week where no economic news of consequence came out, the DOW generated a rally and close 500+ points above last week's close. Normally such a move up would be considered impressive but the reality is that there were no fundamental reasons for the rally, the index is still in a clearly defined downtrend, and no levels of resistance were broken. As such, it will likely be categorized as a week where "trading the range technically" was in effect.

The DOW does have a full slate of economic and earnings reports news this coming week starting Monday afternoon after the close with AA reporting earnings, followed by INTC, JPM, BAC, GOOG, and GE the rest of the week. The most important economic report is Retail Sales on Wednesday but Industrial Production, Capacity Utilization, Philadelphia Fed, Michigan Sentiment, as well as a few other lesser reports are due out as well, making this week all about reports and not about technical trading.

On a weekly closing basis, resistance is decent to strong at 10451, decent at 10618 and strong at 11204. On a daily closing basis, resistance is decent to perhaps strong at 10255/10259. Above that level, there is minor resistance at 10360 and strong at 10451. On a weekly closing basis, support is minor at 10012, minor again at 9932 and decent at 9686. Below that level support is decent to strong between 9488 and 9495 (previous minor weekly close at 10488 and at the 100-week MA, currently at 9495). On a daily closing basis, support is minor at 9974, minor to decent at 9816, and decent to strong at 9686.

The DOW did generate an "expected" rally this past week as it was unlikely the bears would push aggressively down facing a week (this coming week) where earnings reports are expected to be positive. As such, it is likely the bears stepped back, short-covered on some of their positions, and allowed the bulls to take the index up toward the levels of resistance that will be defended this coming week.

The DOW did close on the highs of the week and some follow through to the upside is expected to be seen. Nonetheless, the daily closing chart shows decent to strong resistance between 10255 and 10259 (10264 to 10315 on an intra-week basis) that is unlikely to get broken unless the economic and earnings reports this week are better-than-expected. As such, it is possible that the DOW could be up as much as 118 points intra-day on Monday and close as much as 61 points higher. Nonetheless, further upside than that is not expected to be seen, at least not until the earnings and economic reports come out.

On the downside and on a daily closing basis, the "demilitarized zone" at 9970-10030 will continue to act as a magnet and if the reports only come out "as-expected", drops down to that level are highly probable. Nonetheless, on an intra-week basis, the closest support is down at 9870. and if the DOW starts trading below 10,000, drops down to at least that level will likely be seen. The stronger support is down between 9686-9758 and with any kind of "small" disappointment in the reports, that level will be the objective, even if the index has built a short-term bottom (unlikely).

This coming week will be all about reports. The probabilities favor the downside as the burden of proof is still on the shoulders of the bulls. That means that if the reports don't come out better than expected, the market is likely to fall. The biggest problem facing the bulls is that the reports are "already anticipated" to be good and under these present financial conditions, such expectations may be a bit exaggerated.

Monday is likely to be all technical trading with the possibility of the DOW closing up as much as 61 points higher. Nonetheless, closing that high is not a requirement as resistance is found starting at 10193 and that level was already reached with the close on Friday. As such, it is probable that Monday's action will start to show what the traders think of how the economic and earnings reports will come out this week. That means that if the index does move higher intra-day, but closes in the red on Monday, the probabilities will even be stronger that the reports will disappoint. For that reason alone, Monday could be an indicative day.

NASDAQ Friday closing price - 2196

The NASDAQ did generate a rally of 100 points from last week's close but even with the rally, the break of the 200-week MA, currently at 2220 was confirmed with a second week in a row close below the line. The index did close on the highs of the week and it is likely that further upside will be seen on Monday with the 200-week MA as the objective (24 points higher). Nonetheless, the index did have an "inside" week and that usually means that the overall direction continues to be down as the direction the previous week prior to last week was down.

The NASDAQ had been the leader to the upside up until about 5 weeks ago. Nonetheless, that trend has changed and it continued to be evident this past week during the rally as the index underperformed the other indexes by .3%, this likely means that this rally was more about short-covering than about the bulls buying anew.

On a weekly closing basis, minor to decent resistance is found at the 50-week MA, currently at 2210, and decent to strong resistance will now be found at the 200-week MA, currently at 2220. Above that level, resistance is strong between 2310 and 2317. On a daily closing basis, there is decent resistance between 2196 and 2204. Above that level there is minor resistance between 2221 and 2223 and then nothing until decent resistance is reached at the 200-day MA, currently at 2252. On a weekly closing basis, support is decent to strong at 2141 and strong at 2092. Below that level resistance is decent at the 100-week MA, currently at 1970. On a daily closing basis, support is minor to decent at 2159, very minor at 2126, and strong at 20.92. Below that, resistance is strong between 2045 and 2048, minor at 1970 and decent again at 1931.

It has been highly probable that after the break of the 200-week MA last week that the NASDAQ would go back up and test the line that had held so firmly since December, before embarking on a downtrend of consequence. Nonetheless, it must be mentioned there was one previous break of the 200-week MA back in Jan/Fed that lasted for 4 weeks without being negated. In the end, though, the break was negated and the index went on to make new 17-month highs. As such, this break of the line cannot yet be considered a definitive break. It is evident that the upcoming earnings report quarter will have a lasting impact on the index but that also means that for the next 2 weeks at least, the break of the important MA will depend on how the earnings quarter comes out.

In looking at the daily chart, the NASDAQ shows quite a bit of intra-week resistance between 2204 and 2214. If the recent break of support is real and the index is to begin a downtrend of consequence, it is not likely the index will be able to get above that level this week. Getting up to the 2208 to 2214 level would accomplish several things, though, starting with closure of the "third" gap at 2208, a complete test of the 50-week MA at 2210, as well as getting close and high enough to the 200-week MA at 2220 to fulfill the requirement for a retest of that line as well. As such, the action on Monday, and probably more importantly on Tuesday is likely to give a clear indication of what the traders are planning to do. Should the index be able to get above 2214, then the possibilities increase that intra-week the NASDAQ could go as high as 2252, as that is where the next intra-week resistance is found.

The NASDAQ shows minor intra-week support at 2186 and decent to strong support between 2139 and 2141. As such, to the downside the support at 2139/2141 has to be considered important. A break of that support intra-week will likely cause the traders to turn strongly bearish and push the index back down to test the recent low at 2061 and likely break it, with 2000 becoming the main objective. What this all likely means is that the index has a trading range between 2139 and 2214 that can be traded without much meaning attached. That range is also the likely trading range for the first few days of the week, or at least until the news coming out this week is digested fully.

SPX Friday closing price - 1077

Like the NASDAQ the SPX had an inside week that suggests that the trend down will continue after the economic and earnings reports come out this week. Nonetheless, the index was able to shrug off last week's break of the 10-month intra-week support at 1020, and the subsequent rally of 50+ points was the end result of the failure to follow through seen.

The SPX did get down to the 100-week MA last week (currently at 1015) and the bounce up from what should be a strong support level has to considered weak. None of the other indexes got down to such a support and that likely means that if the reports coming out this week are bearish, that the index will break below the 100-week MA on the next push down, giving even a stronger sell signal than would be expected.

On a weekly closing basis, resistance is decent to strong at 1118. Above that level, strong resistance is found at 1145 and major at 1217. On a daily closing basis, resistance is very minor at 1088, strong at 1003 and very strong at 1118. On a weekly closing basis, decent support is found at 1065/1066 and strong support at 1023. Below that level there is decent support at 1014 (100-week MA) and decent to strong at 1000 (psychological support). Below that level there is minor support 946 and the no support until strong support is found at 876/879. On a daily closing basis, support is minor at 1068, decent at 1050 and strong at 1023. Below that, there is decent support between 994 and 1006, minor again at 979, and strong down at 879.

The SPX was the only index that reached the 100-week MA on this move down. The index did bounce off of that line this past week but the bounce has not yet accomplished anything of consequence to the upside. Nonetheless, with a slew of earnings and economic reports due out this week, it is likely that the action will be indicative of what is to come especially since 3 of the earnings reports due out are in major banking stocks (C, BAC, JPM). As such, it is highly probable that those earnings reports will determine, at least on a short-term basis, the status of the financial industry.

On a negative note, it can be said the SPX failed to rally enough this week to put the index in a favorable chart position. The index has a very decent to strong resistance level on the daily closing chart at 1103 and the close at 1077 leaves the stock very far away and with a lot of territory to cover just to get "up to" resistance. As such, even if the earnings reports come out positive, it might not be enough to generate new chart buying. In addition, both of the other 2 indexes did get up to the 50-week MA this past week but the SPX also came up short as the 50-week MA is currently up at 1094. Such action seems to suggest that the news this week will not help the index go much higher.

On a positive note, though, the SPX was able to get substantially above a previously strong intra-week support level at 1041 and it is to be expected that if the index falls back down to that level this week that good chart buying will be seen. Nonetheless, taking away the support of the 100-week MA, the chart of the SPX looks bearish. Three weeks ago the index had "key" reversal week and closed at 1077. Taking away the action of the last 2 weeks, the index still finds itself at the same closing level as seen on the reversal week, and that simply means the rally this past week is up to now a non-event.

Rallies up to the 50-week MA, currently at 1094, could be seen on Monday if the indexes do show some follow through strength. Nonetheless, if the index fails to get up that high, the probabilities will strongly favor the bears. In addition, any red close could mean the index will not go any higher.

This coming week has a lot of uncertainties if for no other reason than news always trumps charts and there is a wide array of news due out. The probabilities continue to favor the bears as no resistance levels were broken this past week in spite of the strong rally in the indexes. In addition, the anticipation for the earnings reports is already favorable which likely means that if the reports come out as expected, or lower, that disappointment is likely to rule. In addition, the short-term trend is down and to turn a trend around more than just a few positive reports are needed.

There are also several economic reports due out this week with Retail Sales being the most important. Last month Retail Sales came in much lower than anticipated and if that trend does not turn around this month, the bulls will have a tough time convincing anyone that money is flowing out of the pockets of the consumer. The Retail Sales number is anticipated to be the same as came out last month (-2%).

It is evident that Monday will be a technical day as no news is due out. As such, the indexes are likely to set themselves up chart-wise on both directions to take advantage of the news that begins Monday after the market closes with the AA earnings report. It should be noted that AA has always been known as a market predictor showing the likely direction for the market for the next 3 months, based on whether the earnings are worse or better than anticipated. As such, the market could begin to show a definite direction as early as Tuesday morning, even though other reports are due out later on in the week. Consider that the last 2 weeks cancelled out each other as the indexes basically moved up last week what they had lost the previous week. Nonetheless, the action 3 weeks ago was bearish and that will likely be the overall disposition of the market this coming week.