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Sunday, January 24, 2010

Stock Index Chart Patterns - FTSE 100, CAC 40, DAX - Jan 22, '10

FTSE 100 index chart

FTSE_Jan2210

Last week I had mentioned that the correction in the FTSE 100 index chart pattern may continue. After clinging on to the 5500 level on a closing basis for the first two day's of the week, the index succumbed to a renewed global bear assault and fell below the 50 day EMA on rising volumes.

That doesn't augur too well for the bulls, even as the long-term moving average continues to rise. The index had not closed below the 50 day EMA in the last 6 months.

The technical indicators have weakened further. Both the RSI and MFI have dropped below the 50% levels. The slow stochastic is ready to enter the oversold zone. The MACD is still positive, but falling fast  below the signal line.

Friday's low of 5303 was higher than the Dec '09 low of 5176. The bulls can use that as a rallying point to fight back quickly, otherwise the bears may regain complete control.

DAX index chart

DAX_Jan2210

Despite a valiant effort on Tuesday, Jan 19 '10 the bulls could not regain the 6000 level, and the DAX index chart fell below the 50 day EMA after the bear onslaught on increased volumes.

The 'Quantum of Solace' for the bulls is that Friday's low of 5639 stopped short of falling below the Dec '09 low of 5605. The 200 day EMA is also rising.

The technical indicators have weakened some more. Both the RSI and MFI are below their 50% levels. The slow stochastic has just entered the oversold zone. The MACD has turned negative and is below the signal line.

The bulls will hope for a quick recovery, just like in early Nov '09. Wonder if they haven't already exhausted their fire-power.

CAC 40 index chart

CAC_Jan2210

The CAC 40 index chart didn't fare much better than its European neighbours, closing below the 50 day EMA on higher volumes. It briefly moved above the 4000 level on Tuesday, Jan 19 '10 but reacted downwards almost immediately.

The 200 day EMA is still rising, but the technical indicators are weakening. Both the RSI and MFI have fallen below the 50% levels. The slow stochastic has just entered the oversold zone. The MACD is barely positive and below the signal line.

Bottomline? The European index chart patterns seem to be succumbing to a concerted bear attack. Book profits, but stay ready with your buy list. A deeper cut will present buying opportunities.

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