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Sunday, November 22, 2009

Stock Index Chart Patterns - FTSE 100, CAC 40, DAX - Nov 20, '09

FTSE 100 index chart

FTSE_Nov2009

Last week, the technical indicators of the FTSE 100 index were looking strong, but the negative divergences and low volume on Fri, Nov 13 '09 gave the bears an opportunity to fight back.

The index jumped to a new high of 5397 on Mon, Nov 16 '09 and managed to close above the 5300 level on the first three days of the week. What began with a bang, ended with a whimper. The FTSE 100 index not only closed below the 5300 mark, but ended 45 points lower for the week.

Bulls may try to take heart from the fact that the sequence of higher tops and higher bottoms have not yet been broken; the index received good support from the 20 day EMA and the 50 day and 200 day EMA are still moving up. Bears will rejoice that the down days had higher volumes.

The RSI is above the 50% level and trying to move higher. The MFI made a lower high and is moving down towards the 50% level. The slow stochastic has dropped from the overbought zone and the %K line had a bearish cross below the %D. The MACD has started dropping and made a lower high, but it remains in the positive zone and just above the signal line.

DAX index chart

DAX_Nov2009

The bull rally in the DAX index is in greater danger of faltering. The high of 5843 made on Nov 18 '09 fell short of the Oct 20 '09 high of 5888. Unless the Oct '09 high is crossed soon, the bears will regain control.

The correction on the last two days of the week got support from the 20 day EMA, but Friday's down-day volume was the highest of the month. The index closed 24 points lower for the week.

The RSI is above the 50% level and moving higher. The MFI is also above its 50% level but is moving sideways. The slow stochastic turned down after touching the overbought zone and the %K is about go below the %D line. The MACD is just about positive and above the signal line, but has started falling.

CAC 40 index chart

CAC_Nov2009

The CAC 40 index is looking the weakest of the three. The high of 3868 made on Nov 16 '09 was 46 points (1.2%) below the Oct 20 '09 high of 3914. The bull rally will be over if a new high isn't made soon.

The index has dropped below the 20 day EMA and got support at the 50 day EMA. Down-day volumes on the last two days were higher than the up-day volume on Monday, as the index closed 77 points (2%) lower for the week.

The RSI is above the 50% level and moving up. The MFI is touching the 50% level and failed to sustain above it. The slow stochastic is falling after a brief sojourn into the overbought zone, and the %K has gone below the %D. The MACD is barely positive and just above the signal line.

Bottomline? The technical indicators in the European indices are favouring the bears. The bull rally is under real threat. Only another dose of fiscal stimulus can stop the bear attack, because the European economies aren't improving fast enough. Book profits.

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