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Monday, July 13, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jul 10, 2015

S&P 500 Index Chart

S&P 500_Jul1015

The daily bar chart pattern of S&P 500 tested support from its 200 day EMA, and even closed for a day below it (for the first time since Oct ‘14) before bouncing up. At the time of writing this post, the index is trading above its three EMAs in bull territory.

Is the correction from the small ‘double top’ at 2134 (touched on May 20 & 21 ‘15) over? Not just yet.

The Greece debt problem has been swept under the carpet for the time being. China’s state intervention has averted a stock market crash. Less than impressive growth in USA means interest rates are unlikely to be raised in the near term.

That is enough impetus for bulls to fight back. Daily technical indicators are showing signs of upward momentum. RSI has managed to cross above its 50% level into bullish zone. MACD and Slow stochastic remain in bearish zones.

Sliding volumes during the recent bounce up doesn’t augur well for bulls. Without volume support, the rally may fizzle out. A convincing move above 2130 is required for the index to negate the bearish pattern of ‘lower tops and lower bottoms’.

On longer term weekly chart (not shown), the index dropped below its 20 week EMA but bounced up after receiving good support from its 50 week EMA, and is trading well above its rising 200 week EMA in a long- term bull market.

Weekly technical are looking a little bearish. MACD is falling below its signal line in positive zone. RSI is seeking support from its 50% level. Slow stochastic has dropped below its 50% level. Strong volumes on down weeks is an indication that bears remain active.

FTSE 100 Index Chart

FTSE_Jul1015

The following comment appeared in the previous post on the daily bar chart pattern of FTSE 100: “A last-minute resolution of Greek’s sovereign debt problems may act as a positive trigger for bulls.”

The Greek debt resolution took longer than expected – long enough for the index to plunge below 6450 deep inside bear territory.

Expectations of a solution led to a smart upward bounce, and a pullback towards the 200 day EMA. Note that the 50 day EMA has crossed below the 200 day EMA. However, the ‘death cross’ that technically confirms a bear market hasn’t been a convincing cross yet.

That may encourage bulls to continue the rally. Sliding volumes (not shown on chart) during last week’s bounce is an indication that the index may not be able to overcome overhead resistances from the 50 day and 200 day EMAs.

Daily technical indicators are showing upward momentum. MACD has crossed above its signal line in negative zone. RSI and Slow stochastic have moved up to their respective 50% levels.

On longer term weekly chart (not shown), the index dropped sharply below its 50 week EMA and tested support from its rising 200 week EMA before bouncing up, and technically remains in a long-term bull market. Weekly technical indicators are in bearish zones.

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