On both an intra-day as well as on a weekly closing basis, it is likely the DOW will see 13000 this coming week, but that level is a decent resistance as there are two previous weekly closes at 12981 and 13079. In addition, even levels such as 12000, 13000. 14000 will always offer strong psychological support and resistance. Due to the economic conditions presently in place, it is unlikely that the DOW will be able to rally very much above the 13000 level, without some additional fundamental news or changes.

Intra-week incursions and even daily closes above 13000 are probable, should the stock get up to that level, but the resistance seen on the weekly chart between 12981 and 13110 is likely to stop the index from establishing a beachhead of consequence above that 13000-13079. Nonetheless, it must be said that the resistances mentioned above are all from previous low closes and that type of resistance is not always the strongest.

Resistance will also be found at 13079 from the 200-day MA and at 13113 from the 50-week MA. Both of these MA’s, in addition to the previous weekly low closes at 12981 and 13079, present a might resistance area. It is important to note, though, that the chart does not actually show any previous “highs” of consequence, on a daily closing basis, until the 13307 level is seen. Above 13307, on a daily closing basis, there is 13379 and then 13349. The same levels present resistance intra-day between 13367 and 13500. Support, should the stock get up to 13000 next week, will be very strong at 12848 and major at 12743.

The DOW seems to have broken out of a flag formation that projects, on an intra-day basis, a rapid move up to the 13281 level next week. Whether the DOW is able to get there or not will be indicative of just how strong this breakout is. It is possible that after the FOMC meeting results on Wednesday, the indexes may run up to that high level and even perhaps up to the first daily closing high resistance at 13307. Nonetheless, it is likely those intra-day rallies will be met with very strong selling and the weekly close likely to end up below the 50-week MA at 13113.

I don’t believe the fundamental picture will presently support the DOW staying above 13000 for long. It is likely, though, that for the next week or two the index will be trading between 12743/12848 and 12981/13079, on a weekly closing basis with potential rallies up to the 13300 level on an intra-day or intra-week basis. Nonetheless, after a week or two, I believe the index will start showing weakness and a trend down toward the 12100 level will begin.

Based on the close on Friday as well as the expectations of good news from the Fed on Wednesday, I believe the indexes will be heading higher the first few days of the week. Nonetheless, caution must still be used as there are over 1200 companies reporting earnings this week. That could throw a “monkey wrench” into the rally. In addition, after the fed report on Wednesday the indexes will likely be on their own with the possibility of “miracle saves” diminished greatly. The action after the Fed report on Wednesday could signal the outlook for the next couple of months.

NASDAQ Friday Close at 2422

The NASDAQ was able to break and close above the 2413 resistance level as well as above the 100-day MA at 24.05, on both a daily and weekly basis. In looking at the chart, there is virtually no resistance of any consequence until the index gets up to the 2500 level. Such a clear path for a rally of about 80 points from Friday’s close is something that the traders will likely drool over.

Resistance will begin to be found at 12489 (minor) and then up at 2505/2515 (major). There is some resistance at 2451, from a strong previous low close at that price, but as I mentioned above, low closes do not offer the same kind of resistance that high closes offer, especially on a daily closing basis (not weekly). Resistance is very strong up at the 2505-2515 level based on several high and low weekly closes going all the way back to January 2007. On a weekly closing basis, there have been 4 times in the last 18 months that the index pivoted around 2505-2515 and that level is likely to act as a brick wall, especially when you add the 200-day and 50-week MA’s which are both currently at 2528. Support should now be found at 2405 from the 100-day MA, 2413 (previous high daily and weekly high close), as well as at 2377 (the most recent previous daily low close).

The NASDAQ was held back on Friday (because of the negative earnings report by MSFT) but after a day of early morning pressure, the ability of the index to rally and close above the previous breakout high, likely means strong follow through on Monday. As with all the other indexes, it is likely the NASDAQ will remain strong until after Wednesday FOMC meeting report. Rallies up to the 2500 level are possible this week.

S&Poors 500 Friday close at 1398

As I have said often in the past, the SPX has often been the chart leader and/or authenticator of the indexes. It was not until this Friday that the SPX was able to break above the strong resistance at 1395 with a close at 1398. Such a break of resistance likely means the expected rally that the other indexes have already foretold is now becoming a reality. Nonetheless, this index has one additional evident hurdle, at 1407, to overcome before it can all be confirmed.

Though the SPX was finally able to close above the 1395 level, the index still has the 100-week MA at 1407 to overcome. The 1407 level is quite important as back in August and November of last year the index has two major low closes at that price. Though previous low closes will never be as important as high closes, the addition of the 100-week MA at 1408 makes that level additionally strong.

Strong resistance is found at 1407 and then little to no resistance until 1433/1441, where the resistance becomes major. Between 1433 and 1441 you will find the 50-week MA as well as the 200-day MA. In addition, between those 2 levels, there are also 3 weekly closes and 3 daily closes, seen during the last 2 years that make the area difficult to overcome. Support is now going to be strong at 1376/1379 and again at 1390/1395.

Though the SPX still has a major hurdle to overcome at 1407, it seems probable that with the strength seen late Friday, the expectation of the Fed lowering rates further at the FOMC meeting on Wednesday, and the strong breakout the other indexes showed this past week that it will be able to rally and head toward 1433/1441, over the next week or two.

It will be important, though, to see how the SPX handles the 1407 level as it could give a clue to the actual strength the indexes may or may not have.

In addition, a drop in the Fed rate on April 30th will likely be the last for many months to come and therefore no further temporary “miracle” cures will be available. It has been said by many analysts that the action of the Fed will not bear fruit for at least 6-9 months and therefore the indexes will have to fend for themselves without a possible crutch by the Fed. Starting next month, the indexes will likely trade off of economic and earnings reports. Since there are still a mountain of problems to be resolved and many not-yet known, it is likely a sideways trading range with decent peaks and valleys (generated after positive or negative reports as well as “perception” on how the Fed action of the past is doing) will occur.

I do believe that for the next week or two, the recent strength will hold the indexes up around the 13000 level, with possible intra-day incursions into higher territory. Nonetheless, I do not believe the strength will stay around for long and the indexes will then trend lower thereafter.