Monday, October 28, 2013

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Oct 25, ‘13

S&P 500 Index Chart

S&P 500_Oct2513

In last week’s analysis of the daily bar chart pattern of S&P 500 index, it was observed that technical indicators were bullish but showing negative divergences. Accordingly, the recommendation was to stay invested but be prepared for a correction.

Correction? What correction? Rampaging bulls took the index to another life-time high of 1760 – despite a single-day’s profit booking. However, the daily technical indicators are looking overbought and showing negative divergences by failing to touch new highs.

Also, the index is trading more than 140 points above its rising 200 day EMA – a condition that has led to sharp corrections. Many global stock indices are at or near 52 week or life-time highs – which is a sign of a global bull market.

Not a great time to buy, but good to stay invested and enjoy the ride.

FTSE 100 Index Chart


The following were the concluding comments in last week’s analysis of the daily bar chart pattern of FTSE 100 index: “Trading volumes have picked up. The rally is likely to continue.” And so it did – right past the Sep ‘13 and Aug ‘13 tops to cross the 6700 level for the first time in 5 months.

All three EMAs are rising and the index is trading above them. Bulls are back in control. The May ‘13 top is barely 150 points away. However, sliding volumes are a concern.

Daily technical indicators are bullish. MACD is positive, and rising above its signal line. RSI is at the edge of its overbought zone. Slow stochastic is well inside its overbought zone. Any corrective dip can be used to add to existing positions.

Bottomline? 6 months daily bar chart patterns of S&P 500 and FTSE 100 indices indicate that bulls have regained control. Stay invested. Any corrective dips can be used to add.

No comments: