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Monday, April 29, 2013

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 26, ‘13

S&P 500 Index Chart

S&P 500_Apr2613

In last week’s analysis of the 6 months daily bar chart pattern of S&P 500 index, it was mentioned that the drop to the 50 day EMA was an adding opportunity because the index is in a bull market. However, the bull market is getting a bit long in the tooth.

The index is trading close to its all-time high, and more than 100 points above its 200 day EMA. Despite the sharp rally last week, the index touched a slightly lower top. The upside risk is increasing. Stay invested but maintain strict stop-loss.

Daily technical indicators are bullish, but showing some signs of weakness. MACD has moved up to touch its signal line in positive territory. RSI is above its 50% level, but sliding down. ROC has slipped into negative zone. Slow stochastic has moved above its 50% level.

Q1 GDP growth of 2.5% was much better than the 0.4% growth in Q4 ‘12, but lower than estimates. Consumer spending was better than expected. The jobless growth continues at a slow pace.

FTSE 100 Index Chart

FTSE_Apr2613

The FTSE 100 rallied smartly to close above all three EMAs, and gained 2.2% over the previous week. The 20 day EMA did not fall below the 50 day EMA, but the index failed to rise above its Apr 2 top of 6502.

The low of 6214 touched on Apr 5 hasn’t been breached either. The index has spent the month in a sideways consolidation within a 300 point range. The down trend that started after the Mar ‘13 double-top at 6534 is still in progress. But it looks like a mild bull market correction.

Daily technical indicators are looking bullish, but showing signs of weakness. MACD has moved above its signal line into positive territory. RSI is above its 50% level but turning down. ROC is positive, but falling towards the ‘0’ line. Slow stochastic has risen above its 50% level.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices are back in bull territories after brief corrections. Dips can be used to add to existing positions, but maintain trailing stop-losses to protect profits.

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