Monday, June 23, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jun 20, ‘14

S&P 500 Index Chart

S&P 500_Jun2014

The 6 months daily bar chart pattern of S&P 500 rose to touch new intra-day and closing highs on Fri. Jun 20 ‘14, supported by a huge spike in volumes. Bulls shook off a weak bear attack in the wake of the turmoil in Iraq like water off a duck’s back.

All three technical indicators have re-entered their respective overbought zones, and showing negative divergences by failing to touch new highs with the index. One must remember that markets can remain overbought (or oversold) for long periods.

That doesn’t mean caution should be thrown to the winds. Bears tend to get active at or near lifetime highs. Stay invested. Maintain a trailing stop-loss to protect profits, and enjoy the ride.

On long-term weekly chart (not shown), all three weekly EMAs are rising and the index is trading above them in ‘blue-sky’ territory with no known resistances. Next target 2000? Expect some selling there.

FTSE 100 Index Chart


The 6 months daily bar chart pattern of FTSE 100 had broken down below a ‘symmetrical triangle’ pattern – as mentioned in last week’s post – and was expected to correct some more. After correcting down to 6736 on Tue. Jun 17 ‘14, the index turned around and closed the week above all three EMAs and the 6800 level.

Was the downward break out from the ‘ symmetrical triangle’ a ‘false’ one? It would appear so. Significantly strong volumes on Fri. Jun 20 ‘14 (not shown on chart) means the bulls are reasserting themselves. However, the top of 6895 touched on May 15 ‘14 needs to be crossed before bulls can regain complete control.

Technical indicators are beginning to turn bullish. MACD is below its falling signal line, but is turning up after barely slipping into negative territory. RSI has crept above its 50% level. Slow stochastic bounced up from its oversold zone and has almost reached its 50% level.

On longer-term weekly chart (not shown), the index took support from its 20 week EMA, and is trading above all three weekly EMAs in a bull market.

No comments: