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Monday, December 3, 2012

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Nov 30, ‘12

S&P 500 Index Chart

S&P 500_Nov3012

Falling volumes in last week’s analysis of the 6 months daily bar chart pattern of S&P 500 index had raised questions about the sustainability of the rally, unless the bulls were able to generate enough follow-up buying.

The Thanksgiving break seems to have re-energised the bulls. After struggling to cross the 50 day EMA for the first three days of trading last week, the index broke out above on good volumes. However, the zone between 1420 and 1440 is a resistance zone where the bears may put up a fight.

Technical indicators are looking bullish. MACD is rising swiftly above its signal line, but remains negative. RSI has bounced up from its 50% level, and moving sideways. Slow stochastic has risen sharply to enter its overbought zone.

The 20 day EMA is moving up towards the 50 day EMA. Bulls will regain control if the index crosses above 1440.

FTSE 100 Index Chart

FTSE_Nov3012

The 6 months daily bar chart pattern of FTSE 100 index struggled to cross the 5800 level during the first three days of the week. But the bears were overwhelmed as the index rose to touch the 5900 level by the end of last week – regaining almost all its losses during the month.

Daily technical indicators are suggesting the rally isn’t over. MACD has entered positive territory above its rising signal line. RSI has crossed above its 50% level. Slow stochastic is about to enter its overbought zone.

The 20 day EMA has moved up to touch the 50 day EMA. The zone between 5950 and 6000 is a long-term resistance zone where the bears are expected to put up a fight. Bulls will regain complete control on a cross above 6000.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices have rallied smartly after correcting from triple-top reversal patterns. Bulls need to cross strong resistance zones before they can regain control. No fresh buying is advised, but hold on to current positions.

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