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) - On Monday I wrote,

Deteriorating Technicals and a Slap in the Facebook

, and stated that my initial downside target for the

Dow Industrials

was my annual value level at 12,312. That was tested on Wednesday.

The rebound off that level was quite strong leaving me to project that we have seen the lows not only through Memorial Day, but also into month end next week.

The key levels to track for the stock market's ups and downs come from the

Dow Industrial Average

, the

S&P 500

, the



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Dow Transports

and the

Russell 2000

. All five of these averages shifted to negative on their weekly charts on May 11.

Before the Dow Industrials held 12,312 on Wednesday, the Nasdaq failed on strength to its weekly risky level at 2866 on Tuesday. This is an example of how traders and "buy and trade" investors can manage trading positions; buying weakness to a value level and selling strength to a risky level.

In this choppy market my methodology allows you to capture a portion of the market volatility instead of risking the whipsaw of the ups and downs in the wake of European Unio events, the news from Greece, and the economic data here at home.

Doug Kass: 12 Things That Could Derail the Stock Market >>

The weekly chart (see below) for the Dow Industrial Average remains negative. The chart is the revised weekly chart for the Dow Industrial Average showing the bearish configuration.

The Dow is below its five-week modified moving average, which declined to 12,796 this week from 12,863 last week. The momentum (12x3x3 weekly slow stochastic) reading declined to 47.35 this week from 55.82 last week.

My annual value level remains at 12,312 with my quarterly risky level at 12,794, which lines up with the five-week MMA. The major support is the 200-week simple moving average, which held at the Oct. 4, 2011 low and moves up slightly this week to 10,679 from 10,673.

Chart Courtesy of Thomson / Reuters

Here are the key levels for the five major equity averages and scenarios. The monthly closes on May 31 will not affect these scenarios as I will not show any new monthly value levels.

A weekly or monthly close below 12,312 on Dow Industrials will signal significant downside risk in June, ending the first half of 2012 on the defensive.

.A weekly or monthly close above my annual pivot at 1363.2 on the S&P 500 confirms a market bottom vs. the upper bands of volatility, the year-to-date highs: 3,134 on the Nasdaq set on March 27; 1422 on the S&P 500 set on April 2;, and 13,339 on the Dow Industrials set on May 1. In this positive scenario, the upside for the Russell 2000 is its all-time high at 868.57 set on May 2, 2011. The upside for the Dow Transports is its all time high at 5,628 set on July 7, 2011.

If the Dow Industrials have a negative weekly or monthly close below 12,312 the risk on the Nasdaq is to my annual value level at 2698. There are no other annual value levels on the other major equity averages. The risk on a weekly or monthly close below 2698 Nasdaq is a potential second half stock market meltdown where the five major averages decline at least back to the Oct. 4, 2011 lows: 10,404.49 Dow Industrials; 1074.77 S&P 500; 2298.89 Nasdaq; 3950.66 Dow Transports; and 601.71 Russell 2000.