Monday, November 18, 2013

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Nov 15, ‘13

S&P 500 Index Chart

S&P 500_Nov1513

The 6 months daily bar chart pattern of S&P 500 index received good support from its rising 20 day EMA and soared to a new life-time high. The small double-top reversal pattern at 1775 observed last week was negated. The index stopped just short of the 1800 level.

Volumes were strong as the index touched a new high, but the widening gap between the index and its 200 day EMA is a concern. The index is in uncharted territory, with no known resistance.

Daily technical indicators are bullish but looking overbought. MACD has crossed above its signal line just below its overbought zone. RSI has moved up to the door step of its overbought zone. Slow stochastic is deep inside its overbought zone.

All three indicators are showing negative divergences by failing to touch new highs. A correction or consolidation will be good for the sustenance of the rally.

Initial claims of unemployment rose more than expectation. Trade deficit widened on higher imports and lower exports. Looks like the index was celebrating a likely continuation of QE3.

FTSE 100 Index Chart


The 6 months daily bar chart pattern of FTSE 100 dropped below the 6700 level once again, but received good support from its 50 day EMA and bounced up. At the time of writing this post, the index is trading above 6700. The dip provided an adding opportunity.

Daily technical indicators are bearish, but showing signs of turning around. MACD is below its signal line in positive territory, but has stopped falling. RSI has turned up after dropping below its 50% level. Slow stochastic also fell below its 50% level, but is trying to turn up. Volume support will be necessary for the index to climb past the 6800 level.

The UK economy is recovering ever so slowly, but there is hardly any growth in wages. Cost of living is outpacing wage growth.

Bottomline? 6 months daily bar chart patterns of S&P 500 has touched another new life-time high. Stay invested but maintain a trailing stop-loss. FTSE 100 is recovering from a bull market correction. The dip provided an adding opportunity. New highs are expected soon.

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