The bulls are on the verge of regaining control of the 6 months daily bar chart pattern of the S&P 500 index. In a post two weeks back, the concluding comments were: "The index is likely to make another attempt to cross the resistance zone between 1420 and 1440.... Bears may not give up ground easily."
The index managed to cross above the 1440 level, but heavy selling by bears pushed the index down inside the resistance zone between 1420 and 1440. The 20 day EMA has crossed above the 50 day EMA, and the index has found good support from the 20 day EMA. The bears are grudgingly giving up ground, and hoping that the US economy will fall off the 'fiscal cliff'.
Daily technical indicators are bullish, but showing signs of weakening. MACD is sliding down towards its signal line in positive territory. RSI is falling towards its 50% level. Slow stochastic has dropped down from its overbought zone.
The index may consolidate a bit before attempting to test its Sep '12 top.
FTSE 100 Index Chart
After facing some resistance from the 5950 level and dropping to its rising 20 day EMA, the 6 months daily bar chart pattern of FTSE 100 index climbed into the resistance zone between 5950 and 6000 - only to beat a hasty retreat in the face of heavy bear selling.
Daily technical indicators are bullish, but showing weak upward momentum. MACD is positive, but moving sideways. RSI has turned down from just below the edge of its overbought zone. Slow stochastic is about to drop down from its overbought zone.
Expect some consolidation before the index can cross the resistance zone.
Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices have corrected after entering resistance zones. Some consolidation can be expected before resistance zones can be overcome. Both indices are in bull markets. Hold, or use dips to add.
(Wishing all readers, followers and visitors a very Merry Christmas and a Happy New Year.)