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Monday, March 3, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Feb 28, ‘14

S&P 500 Index Chart

S&P 500_Feb2814

The 6 months daily bar chart pattern of S&P 500 rose to touch new lifetime and closing highs on Fri. Feb 28 ‘14. The bull rally seems to be unstoppable. All three EMAs are rising and the index is trading above them. Volumes have started to pick up.

Technical indicators are bullish, but beginning to look overbought. MACD is rising above its signal line in positive territory and is about to enter its overbought zone. RSI is gradually moving up towards its overbought zone. Slow stochastic is inside its overbought zone, but showing negative divergence by failing to touch a new high along with the index.

War drums are beating in Crimea, as Russia has sent soldiers into Ukraine in a bid to overturn the new regime. Whether war will actually break out or not is debatable. But the concern has sent oil and gold prices soaring and stock prices crashing globally. At the time of writing this post, the index has started to correct.

Book partial profits.

FTSE 100 Index Chart


The 6 months daily bar chart pattern of FTSE 100 reached within a point of its Jan ‘14 top (of 6867) on Tue. Feb 25 ‘14, but formed a ‘reversal day’ pattern (higher high. lower close) and started to correct.

The index received good support from its rising 20 day EMA and closed the week above the 6800 level. Daily technical indicators reached their respective overbought zones that warned about a possible correction.

At the time of writing this post, the correction has gathered strength on fears of a possible war in Ukraine. The index has lost more than 100 points and is struggling to stay above the 6700 level.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 indices are again facing bull market corrections, this time only partly due to technical reasons. Concerns about a war in Ukraine has made bulls jittery. Time to take some profits off the table.

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