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Monday, January 13, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jan 10, ‘14

S&P 500 Index Chart

S&P 500_Jan1014

The 6 months daily bar chart pattern of S&P 500 spent a week of sideways consolidation with a slight upward bias, closing marginally higher for the week. All three EMAs are rising and the index is trading above them, which shows a bull market in progress.

Daily technical indicators corrected from overbought conditions, but remain in bullish zones. MACD has just crossed below its signal line in positive territory. RSI is rising towards its overbought zone after briefly slipping below its 60% level. Slow stochastic has moved back inside its overbought zone.

A concern for the bulls is the high volumes on a mid-week down day. The index is still trading 150 points above its 200 day EMA – a condition that can lead to a sharp correction at any time.

Even though the unemployment rate has fallen much faster than expected in the past year — tumbling 0.3% in December — the decline has been driven mostly by increasing numbers of people deciding to "drop out" of the labor force, rather than by an increasing pace of hiring.

FTSE 100 Index Chart


The 6 months daily bar chart pattern of FTSE 100 consolidated sideways between 6700 and 6800, closing a tad higher for the week. All three EMAs are rising and the index is trading above them. Bulls have regained control of the index after an interim down trend. Note that volumes rose during the week, which is a sign of ‘accumulation’.

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

Some more consolidation may help the index to cross above the 6800 level.

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

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