Monday, February 17, 2014

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

S&P 500 Index Chart

S&P 500_Feb1414

In last week’s analysis of the daily bar chart pattern of S&P 500, the following remarks were made: “The index has retraced more than 50% of its fall from the Jan 15 top of 1851 to the Feb 5 low of 1738. The correction appears to be over. The long-term bull market is intact.”

The index easily climbed past its 20 day and 50 day EMAs to touch an intra-day high of 1842 on Fri. – just 9 points short of its lifetime high of 1851. The 20 day EMA has crossed above the 50 day EMA. Bears appear to be out for the count.

Volumes remain a concern though. The 100 points rally from previous week’s low of 1738 was accompanied by falling volumes. Rallies require good volume support to sustain.

Daily technical indicators are looking bullish. MACD has crossed above its signal line and entered positive territory. RSI has moved above its 50% level. Slow stochastic has entered its overbought zone. A rise past 1851 should restore complete control to bulls.

Add/hold existing positions.

FTSE 100 Index Chart


The daily bar chart pattern of FTSE 100 faced a couple of days’ resistance from its 20 day EMA before smartly moving above its 20 day and 50 day EMAs. On Wed. Feb 12, the index touched an intra-day high of 6708 – retracing more than 50% of its fall from the Jan 21 high of 6867.

Profit booking briefly dropped the index below its 20 day and 50 day EMAs on Thurs. But the index managed to close above all three EMAs by the end of the week.

Daily technical indicators are flashing bullish signals. MACD is still negative, but is rising above its signal line. RSI and Slow stochastic have risen above their respective 50% levels. Bulls are back on the driver’s seat.

Technical ‘health’ of the chart has been restored. Time to add to existing holdings.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices are back in bull territories after recovering from strong bear attacks. The corrections have improved the technical ‘health’ of the charts. Both indices should move to new highs. Add/hold.

No comments: