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Monday, September 7, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Sep 04, 2015

S&P 500 Index Chart

S&P 500_Sep0415

A sharp upward bounce from the previous week’s ‘panic bottom’ on the daily bar chart pattern of S&P 500 failed to attract much follow-up buying. In a volatile trading week, the index dropped down to close almost 3.5% lower for the week.

All three daily EMAs are falling and the index is trading below them. The 50 day EMA has crossed below the 200 day EMA – the ‘death cross’ technically confirming a bear market.

The index had a spectacular bull run – making a lot of money for investors. Long bull runs don’t end suddenly. The first warning was provided back in Oct ‘14, when the index suddenly collapsed below its three EMAs, only to bounced back immediately.

It then went through a sideways consolidation within a ‘rectangle’ for 6 months, touching a lifetime high but giving enough indications of a topping out process. The eventual break down should not have come as a surprise to readers of this blog.

All three technical indicators are in bearish zones and showing downward momentum. Expect the correction to continue. The index is likely to test and breach the Aug ‘15 low of 1867.

On longer term weekly chart (not shown), the index closed well below its falling 20 week and 50 week EMAs but is trading above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are in bearish zones and showing strong downward momentum. The long-term bull market may get reversed.

FTSE 100 Index Chart

FTSE_Sep0415

The daily bar chart pattern of FTSE 100 consolidated sideways with a downward bias during the week, losing more than 200 points (3.3%) on a weekly closing basis.

All three daily EMAs are falling and the index is trading below them in a bear market. The Aug ‘15 low of 5768 is likely to be tested and breached.

All three daily technical indicators are in bearish zones. RSI and Slow stochastic have corrected oversold conditions, but MACD is still inside its oversold zone. At the time of writing this post, the index has moved up above the 6100 level.

On longer term weekly chart (not shown), the index closed well below its three weekly EMAs for the third straight week, and has probably entered a long-term bear market. Weekly technical indicators are in bearish zones.

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