This past week, on two different days, the DOW tested the 12069 previous intra-day and daily closing support. This was one of the possible objectives on the downside. After being unable to break below that level, the index generated a rally on Friday and closed above the most recent high close at 12290. Such a rally and close above a previous minor resistance level, seems to show that the unrelenting pressure the index has been under has diminished and that rallies are now possible and even probable.

On a daily closing basis, resistance is minor at 12393 and a bit stronger at 12480. Resistance is quite strong at 12549/12552, from two previous high closes as well as from the 20 and 100 day MA’s. The intra-week/intra-day chart shows decent resistance at 12476 level (20-week MA) and at 12518 (previous major low of consequence). Support will be decent at 12182-12210, minor at 12155, decent again at 12066-12077, and very strong at 11940.

The DOW traded over a 292 points range this past week and looking at the support and resistance levels in the chart, it is likely that a trading range between 12182/12210 to 12480/12518 will be seen this coming week.

Trading in this range will be just that, trading. as it will not likely give any clue as to what the indexes will be doing thereafter. It is still highly probable that the outside parameters of the sideways trading range I have mentioned often in the past, between 12743 and 11940, will both be seen, at some point over the next 2-3 weeks. For the next 2-3 weeks, the thing to expect from the DOW are short-term movements in both directions. The overall trend of the DOW is still cloudy and undecipherable.

Take a close look at 12192 and at 12369, this coming week. A break of either of those two levels will likely generate follow through in that direction. With the DOW having closed at 12307, and on the highs of the day, the 12369 level is likely to be the first to be tested. It is possible that for Monday, both of those levels will be seen and on Tuesday a break above or below will happen, thus generating further movement to the support/resistance levels mentioned above.

NASDAQ Friday Close at 2454

The weekly chart in the NASDAQ continues to show a bullish divergence over the DOW weekly chart and it is almost like looking a two completely different charts all together. Even though the NASDAQ closed lower this week than last week and the NASDAQ did just the opposite, the index was able to hold above the two previous weekly low closes at 2445 and also above the 100-week MA. The possibility of a bullish flag formation was kept alive with this action.

This past week, the NASDAQ did break and close below its daily closing support levels at 2441-2445 but with the close on Friday above 2445, that breakdown was negated. The index is now back into a bullish outlook with the trading parameters for the week clearly defined.

Resistance, on a daily closing basis, must now be considered quite strong at 2483-2489 as that is where there are two important previous daily high closes, a previous daily low close, as well as where the 20-day MA is located. On the weekly chart, resistance is strong at 2503-2515 and very strong at 2521/2523 where the previous weekly high close as well as the 50-week MA is located. Support, on a daily closing basis, is now strong again at 2440-2445, and very strong at 2390-2413. Major support, on a weekly closing basis continues to be at 2373.

The NASDAQ chart is looking more and more like the “key” to whatever the indexes will do for the few months. The weekly closing prices are being kept between the 50 and the 100 week MA but those averages continue to shrink into each other and it certainly seems likely that within the next 3-5 weeks, at most, that one of the other will be broken decisively.

One additional factor to consider is that the NASDAQ had a major intra-week low back in August 13th of last year at 2387. That low was made just prior to an 11-week rally that took the index up to a 7-year high at 2862. This week’s intra-week low was 2388 and with the weekly chart formation looking quite bullish, if the NASDAQ is able to close above 2521, on a weekly closing basis, a rally up to at least the 2707 level is likely to be seen. By the same token, if the weekly support level at 2445 is broken decisively then much of the bullishness of the chart formation will be gone.

I am probably jumping the gun by mentioning all these possibilities, as none of them are likely to happen over the next couple of weeks. Nonetheless, I do believe it is important to know what is at stake and how the NASDAQ seems to be playing, in the charts, an integral part of what the indexes may end up doing.

For this coming week, I expect the NASDAQ to trade between a low of 2430 and a high of 2485 and for nothing to be decided.

S&Poors 500 Friday close at 1360

The SPX ended up having an uneventful weekly close, as it was neither higher nor lower than last week. Nonetheless, a lot was accomplished during the week as the index traded all the way down near-to what a lot of analysts consider to be a level that is major support, between 1324 and 1331 (low of the week was 1331). On the weekly closing chart, though, nothing was accomplished as the index was able to maintain itself above the 20-week MA and no decision on the index’s future was determined.

The drop down to 1331 did fulfill the minimum drop needed to be considered a major re-test of support and if the index closes higher this coming Friday, it is possible that some upside momentum will be re-established. Like with the DOW there is still the possibility of one more drop down to the 1325 level, to come over the next 1-3 weeks. That drop, though, is not likely to happen this coming week.

Resistance is minor but evident at 1361, as that is where the 100-day MA is currently located. Above that level, there is no resistance of any consequence until 1383-1388 is reached. At that level the resistance is strong. Major resistance is at 1417-1428 where the 50 and 100 week MA’s are located. Support is minor at 1350 and then strong at 1331 and 1325. Major support at 1311.

With the close on Friday on the highs of the day and right at the 20 week and 100 day MA’s, it seems likely to assume the index will continue trading above those MA’s on Monday. If that happens, a rally up to 1384 will likely occur. It is of some importance that the SPX manage a higher close next week or else the downside will be tested strongly for the next few weeks to come.

The chart is not giving a clear sign of what is to come as most of the downside has been accomplished but the upside looks to be an uphill climb as well. Possible trading range for the week could be 1350 to 1384.

Most of the downside objectives have been reached and with so much bad news already out in the market, it is difficult to imagine what else could happen to generate further downside. Already it is being anticipated the Fed will raise interest rates at the next Fed Meeting, the consumer confidence numbers came out this past week at 25-year lows, and the financial companies were once again in trouble this past week. None of this information was able to generate a break of major support, even though the indexes were under strong pressure all week. It seems probable to think that at least until the Fed meeting next week, that the indexes are likely to show some strength. Even if the Fed does raise interest rates next week, it now seems likely that the recent lows will hold or only be broken by a small margin.

The probability of the stock indexes being in a sideways range continues to be strong but the possibility of a strong rally in a few weeks has increased.