Monday, January 6, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jan 03, ‘14

S&P 500 Index Chart

S&P 500_Jan0314

The daily bar chart pattern of S&P 500 ended 2013 with a bang – touching new life time intra-day and closing highs – just short of the 1850 mark. However, volumes were low – which is typical during the holiday season. The New Year started with profit booking on increased volumes.

Daily technical indicators are in bullish zones after correcting from overbought conditions. MACD is about to drop from its overbought zone, but remains above its signal line. RSI has dropped to its 60% level after a brief move inside overbought territory. Slow stochastic has formed a small ‘rounding top’ reversal pattern inside overbought zone and has started falling.

The index is still trading almost 150 points above its rising 200 day EMA. Some more correction or consolidation will help to propel the index even higher.

The economy keeps ticking along slowly but surely. Unemployment claims are trending down. Auto sales are improving. Corporate results for 2013 may provide the next boost to the index.

FTSE 100 Index Chart


In the previous post, it was observed that the 6 months daily bar chart pattern of FTSE 100 had reversed the down trend that started after the index had touched a peak of 6820 on Oct 30 ‘13. A sharp uptick in volume accompanied the move above the 50 day EMA.

A few days later, the 20 day EMA crossed above the 50 day EMA as the index cleared the hurdle at 6700. A sideways consolidation has started after a convincing return to bull territory. After 2 months, the index is trading above all three EMAs and the 6700 level.

Daily technical indicators are bullish, but looking overbought. MACD is rising above its signal line towards its overbought zone. RSI is just below its overbought zone. Slow stochastic is moving sideways inside overbought territory.

Some more consolidation or correction will help the index to move above the 6800 level to touch a new 52 week high.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices are in long-term bull markets, but undergoing corrective moves. Both indices should move up further to touch new highs. Corporate results may provide the boost. Hold on to existing positions, but maintain trailing stop-losses.

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