8:35am (EST)

The bulls finally got the bears off their back after scoring their first weekly win in 7 weeks as the market gained just enough on Friday to end the losing streak.  However, it must be noted that Tech finished the week in negative territory so it wasn’t a clean sweep by the bulls.

We said on Friday the bulls face a crucial test as they needed to overtake a few key resistance areas and the Dow and the S&P 500 managed to do just that.  The Nasdaq, on the other hand, made a brief trip into positive territory which was enough to claim a “W” but remained in a downtrend all day after the initial pop in the morning.  Friday’s slight gains were fueled on hopes Greece gets a bailout but late in the day there were reports surfacing that Moody’s (MCO, $36.33, down $1.94) was putting Italy’s debt rating on review for a possible downgrade. 

We will save the Moody’s story for another day but it’s hard to believe shares have managed to climb 50% this year and are up nearly 100% off their 52-week low of $19-and change. 

The Dow gained 42 points on Friday and finished at 12,004 after trading to a high of 12,072 intraday.  The index managed to hold the 12,000 level which we outlined as resistance followed by 12,200.  If there is a break above 12,200 then the bulls will try to push 12,350 again.  The bears will target 11,800 and then 11,600 which represents the March lows.  For the week, the Blue-Chips added 50 points, or 0.4%, and is up 3.7% YTD.

The S&P 500 gained 4 points to settle at 1,271.50 after kissing a high of 1,279.  We were looking for 1,275 to hold for a possible push to 1,300 but this area has been trouble.  If there is a rally past 1,300 then 1,315-1,325 would come into play but the bears seem determined to test 1,250 over the near-term.  The index started the week at 1,270 and gained a point for the week.  For the year, the S&P is still up 1.1%.

The Nasdaq fell 7 points and closed at 2,616 after reaching a peak of 2,648 but failed the 2,650 level once again.  This is an important area of resistance as the bulls attempt a run back to 2,700, but more importantly, they will need to hold 2,600.  If this level of support is breached then it will be a quick trip down to 2,550-2,500.  For the week, the Nasdaq fell 27 points, or 1%, and recorded it 5th-straight weekly loss.  For 2011, Tech is down 1.4%.

Last week, we mentioned the 10% decline in the Russell 2000 from its 2011 perch of 868.  The index managed to close slightly higher on Friday at 781.75 (up 0.21) and for the week (up 3).  If a turnaround rally is to take place, this index will need to challenge the 800 level again.  If not, the small-caps could be headed to 750, if 775 is penetrated.

The other interesting development that took place is the VIX which jumped over 20 last Thursday.  The S&P 500 Volatility Index (^VIX, 21.85, down 0.88) traded to a high of 24.65 on Friday and we said a jump to 30 could be in the cards on more selling pressure.  A break above 30 could put the market in a freefall.

As we look ahead to this week, we said on Friday that the week after June Quadruple Witching expiration has not been kind to the bulls over the past 2 decades.  The market has dropped 1.2%, on average, during this time frame with the Dow falling 11 straight years and 18 out of the last 20.  Those aren’t good odds (90% chance) for going long but anything can happen and we wouldn’t be surprised to see a rally back to resistance with so many people betting on a correction.

We could see some extra volatility this week as debt concerns around the globe continue to take center stage.  Here at home, expect more water-cooler talk about QE3 with QE2 set to finish by the end of the month.  We aren’t sure what could be up Ben Bernanke’s sleeve because a kitchen sink won’t fit and the money machine is running out of ink but he will come up with something.

This could give the market a lift or it could work against it.  Also, we are entering a period where companies usually “pre-announce” if they are going to miss earnings which begins in July with the start of 2Q’s numbers.  In any event, we expect the recent volatility to continue but we are in good shape.  We have plenty of room in our portfolio for new trades and we expect to be busy this week.  

Futures were weak last night and got progressively worse before we hit the rack on news that Europe has put Greece on the backburner until July.  The country is looking for another $12 billion euro as part of the $110 billion euro bailout package agreed upon but must make another $28 billion euro more in spending cuts by the end of June. 

As such, futures have remained weak throughout the morning.  Dow futures are down 42 points to 11,896 while the S&P futures are lower by 5 points to 1,261.  Nasdaq futures are off 10 points to 2,180. 

We have a lot to cover this morning, including a ton of charts and some new trade ideas.  We may be busy today so look for Trade Alerts.  Subscribers, check the Members Area for the updates.