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Monday, September 16, 2013

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

S&P 500 Index Chart


The 6 months daily bar chart pattern of S&P 500 index moved up into bull territory, backed by good volumes. All three EMAs are rising again, and the index is trading above them. Bulls appear to have regained control after the index corrected during Aug ‘13. But there  are some technical headwinds ahead.

Note the ‘downward gap’ between 1685 and 1680 formed on Aug 15 ‘13. After moving up to fill this ‘gap’, the index formed a ‘reversal day’ pattern on Sep 12 ‘13. Filling of a ‘downward gap’ is usually followed by a resumption of the down move. There is a chance that the rally may stall.

Daily technical indicators are looking bullish. MACD has crossed above its signal line into positive territory. RSI is above its 50% level. Slow stochastic is inside its overbought zone. However, the index is trading a good 100 points above its 200 day EMA and looks ready for a correction.

Initial jobless claims dropped below the 300,000 mark to its lowest level in 7 years. That may be a clear signal of an economic turnaround. But retail sales remain a concern.

FTSE 100 Index Chart


The 6 months daily bar chart pattern of FTSE 100 shows bears grudgingly giving ground to the bulls.  The index moved up to the 6600 level but struggled to cross above it. The 20 day EMA has formed a bullish ‘rounding bottom’ pattern and all three EMAs are rising with the index above them.

Daily technical indicators are in bullish zones. MACD has crossed above its signal line into positive territory. RSI is above its 50% level. Slow stochastic has entered overbought zone. However, sliding volumes remain a bit of a concern.

Increasing construction activity and rising manufacturing numbers are providing a positive outlook to UK’s economy.

Bottomline? 6 months daily bar chart patterns of S&P 500 and FTSE 100 indices are back in bull territories. Global stock markets are awaiting the US Fed’s announcement of a possible tapering of QE3 bond-buying on Sep 18. Await the announcement before opening your purse strings.

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