The DOW closed near the day’s and week’s low and left the door open for further weakness this coming week if no supportive news comes out over the weekend.

Support is very strong at 12743 on a daily and weekly closing basis but if broken the next level of support, on an intra-day basis, is 12500-12518. There is very minor support at 12720, on a daily closing basis, but if broken, it will likely head down to 12589-12606. Resistance will now be very strong up at 13021 and again at 13058. Not only do you have previous closes at that price but also the 200-day MA.

The 20-day MA is currently at 12768 and if the DOW closes below that level on Monday, It is likely to be heading lower during the first few days of the week.

It seems evident that further upside, above what was seen last week, will be difficult to accomplish without strong fundamental news. Since most of the important earnings reports are now out and the Fed is likely heading into a 2-3 months hibernation period, it does not seem plausible to think that fundamental help will be seen any time soon. It is therefore probable that the recent 4-week up-trend is at an end.

On the other side of the coin, unless more negative news is seen this coming week (negative earnings reports, oil prices continuing to spiral upward, etc.), it is also likely that rallies back up to test the 13000 level will be seen. Changing of a trend, even a short-term trend, is usually a 1-3 week event and likely will have some backing and filling as well as a minimum of one re-test of the high.

Based on last week’s range of 340 points and on the likelihood the buyers still have some residual strength, the possible trading range for the week could be 12657 to 12987.

NASDAQ Friday Close at 2445

The NASDAQ suffered a setback this past week when several negative reports, such as the failure of MST and YHOO to agree to a buy-out deal, were announced. Nonetheless, it does seem that as the week progressed, the index did not come under the same kind of pressure that the other two indexes came under and barely closed in the red on Friday.

It is important to note that the NASDAQ was only down 6 points from last week’s close and when compared to the DOW, it can be said that the index showed strength, rather than weakness, in front of the onslaught of negative news.

The NASDAQ shows support, on a daily closing basis, at 2438-2441 and then much stronger down at 2413-2419. The 20-day MA is currently located at 2407 as well as several important daily low closes from 2 years ago. Below that level the 100-day MA is currently located down at 2387 and that would be an objective, on a daily closing basis, should the index close below 2413. Resistance has now become decent at 2483-2489. Strong resistance continues to be seen up at 2505-2515.

The failure of the NASDAQ to fulfill the chart, after its breakaway and runaway gaps down at 2291-2313 and 2348-2362 gave the index a strong push upward, is making the index look very vulnerable. It is probable the buyers will attempt to rally the index back up toward the 2500 level one more time, but if they fail to close above the recent high at 2483 the sellers will gain control and closure of those two above mentioned gaps will likely happen.

Probable range for the NASDAQ this coming week is 2407-2481.

S&Poors 500 Friday close at 1388

After having been successful last week in closing above the 1400 level the SPX failed to confirm the breakout and gave back all of the last 3 week’s gain in just one week. In addition, the biggest disappointment was in failing to reach the daily close resistance levels up at 1433 and 1441 thus giving the bulls reason to doubt the validity of the recent rally and breakout.

The SPX did get up to the 100-week MA with last week’s close and by closing lower this week, successfully confirmed the test of the line. Such a re-test could prove to be very indicative of a negative future outlook. In addition, the index has built a double top, on an intra-day basis, at 1423 that now looms imposing.

Resistance, on a daily closing basis, will now again be strong at 1400 and at 1409 and major up at 1420. Support is found at 1384 from the 20-day MA and at 1388 on a daily closing basis. Below that at 1371 from the 100-day MA as well as from a previous low.

The chart seems to be calling for a drop down to the 1371 level and then a rally back up to the 1400-1403 area. Based on the failure-to-follow-through action this past week, it seems quite unlikely the index will be able to re-establish itself above 1400. Like with the other indexes, weakness will likely be seen the first part of the week and some strength toward the latter part of the week. Nonetheless, unless there is some fundamental piece of news that gives the bulls ammunition, it is likely the SPX will be heading lower for the next few weeks.

This past week it became evident that the buyers have lost their edge and that a round of profit taking occurred. Weekly closes are always important and this past week all indexes were able to close at levels that are not indicative of anything other than a successfully defensive mode. This coming week it is likely the indexes will continue to trade in a defensive mode waiting for some positive news of consequence to appear. At some point in time, when the buyers feel the profit taking is over, they are likely to attempt to re-establish the up-trend and a rally up to the resistance levels will occur. It is my belief that the attempt to re-establish control will fail and in so doing, the sellers will once again gain control over the marketplace.

One additional factor to consider this week will be options expirations. If for no other reason, that fact alone could make this a difficult week to trade.