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Monday, June 15, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jun 12, 2015

S&P 500 Index Chart

S&P 500_Jun1215

The following remarks were made in last week’s post on the daily bar chart pattern of S&P 500: “Slow stochastic has dropped sharply inside its oversold zone. That can lead to a technical bounce. Bears are likely to use any rally to sell.”

The index dropped to an intra-day low of 2072 on Tue. Jun 9, but formed a ‘reversal day’ pattern (lower low, higher close). Over the next two days, the index rose sharply above its 20 day and 50 day EMAs into bull territory, but touched a lower intra-day high of 2115 on Thu. Jun 11.

As expected, bears used the brief rally to sell. The index dropped below its 20 day and 50 day EMAs and the 2100 level, and closed flat for the week. The down trend from the small ‘double top’ at 2134 (touched on May 20 & 21) continues.

Daily technical indicators are turning bearish. MACD is below its signal line in negative zone, and is turning down. RSI faced resistance from its 50% level, and is moving down. Slow stochastic managed to creep above its 50% level, but its upward momentum is slowing down.

Some more correction is likely. Note that the index is trading well above its rising 200 day EMA in a long-term bull market.

On longer term weekly chart (not shown), the index dropped below its 20 week EMA intra-week, but managed to close above its three weekly EMAs in a long-term bull market. Weekly technical indicators are still in bullish zones, but showing downward momentum.

FTSE 100 Index Chart

FTSE_Jun1215

The following comments appeared in last week’s post on the daily bar chart pattern of FTSE 100: “A technical bounce is a possibility - but bears have a firm grip on the chart.”

The index dropped below the 6750 level intra-day on Tue. Jun 9, but closed just above it at 6754. FTSE bounced up nicely above its 200 day EMA over the next two days, but failed to test its falling 20 day or 50 day EMAs.

Bears used the opportunity to sell. The index dropped and closed below all its three EMAs in bear territory. It also closed below the 6800 level for the first time since Mar 31 ‘15. The down trend from the Apr 27 ‘15 lifetime top of 7123 continues.

Note that the index has so far closed within the 3% ‘whipsaw’ limit below its 200 day EMA. That means the breach below the 200 day EMA has not been technically validated yet. Only a close below 6600 will do that. At the time of writing this post, the index is struggling to stay above the 6750 level.

Daily technical indicators are looking bearish and a bit oversold. MACD is falling below its signal line, and entered its oversold zone. RSI is falling below its 50% level after bouncing up weakly from the edge of its oversold zone. Slow stochastic has re-entered its oversold zone. Expect bulls and bears to fight for control of the 200 day EMA.

On longer term weekly chart (not shown), the index dropped sharply below its 50 week EMA but managed to close near it. The 200 week EMA is still rising, and the index is trading well above it in a long-term bull market. Weekly technical indicators are looking bearish and showing downward momentum.

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