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Monday, May 18, 2015

Comparing S&P 500 and FTSE 100 index charts with Nifty – May 15, 2015

S&P 500 Index Chart vs Nifty (in green)

S&P 500_vs_Nifty_May1515

The daily closing chart pattern of S&P 500 reached a lifetime high of 2123 on Fri. May 15 – climbing a wall of fundamental and technical worries, as bull markets often do. However, the past 6 months has been a volatile period that has tested the patience of investors.

The 50 day EMA is rising, and the index is trading above it in a bull market. But the index has barely gained anything since closing at 2117 on Mar 2 ‘15. Volumes have been average, but higher during recent down days – which is a matter of concern for bulls.

Daily technical indicators are in bullish zones. MACD has crossed above its signal line in positive territory. RSI has moved above its 50% level. Slow stochastic has climbed up towards its overbought zone.

However, all three indicators are showing negative divergences by failing to touch new highs with the index. A correction can occur at any time.

Note that Nifty underperformed S&P 500 during mid-Dec ‘14 to mid-Jan ‘15, and again during the past month – but is in the process of forming an inverse head-and-shoulders bottom reversal pattern.

FTSE 100 Index Chart vs Nifty (in green)


The daily closing chart pattern of FTSE 100 has been in a corrective mode since touching a lifetime high of 7104 on Apr 27 ‘15, and is seeking support from its 50 day EMA. It has outperformed Nifty during the past 2 months – thanks to the ongoing correction in the Indian market.

Daily technical indicators are looking a little bearish. MACD has just slipped into negative zone below its falling signal line. RSI and Slow stochastic are a bit below their respective 50% levels.

The margin of victory in the re-election of the Conservative Party was somewhat of a surprise, but the market euphoria seems to have died down quickly.

Expect some consolidation before the index can resume its rally.

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