Sunday, November 15, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Nov 13, 2015

S&P 500 Index Chart

S&P 500_Nov1315

The following comments appeared in the previous post on the daily bar chart pattern of S&P 500:

“Strong volumes on the three down-days of the week show that bears are not going to throw in the towel without a fight. A bit of correction will improve the technical ‘health’ of the chart and allow the index to rise to a new high.” 

The index corrected down to its 20 day EMA on Mon. Nov 9, received good support and bounced up a bit. Bears attacked with renewed vigour and pushed the index below all three EMAs into bear territory by the end of the week.

Note that the 50 day EMA failed to cross above the 200 day EMA and has merged with it. The ‘golden cross’ that technically confirms a bull market was prevented.

The index lost 3.6% on a weekly closing basis. Rising volumes on the last two days of the week indicate that bears are ready to dominate once again.

Technical indicators are looking bearish and showing strong downward momentum. MACD has crossed below its signal line in positive zone. The signal line and 20 day EMA have formed ‘rounding top’ reversal patterns. RSI has dropped below its 50% level. Slow stochastic has entered its oversold zone.

On longer term weekly chart (not shown), the index touched a lower top of 2116 a week ago, and dropped sharply below its 20 week and 50 week EMAs. However, it is trading well above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are beginning to turn bearish.

FTSE 100 Index Chart


The sideways consolidation below its sliding 200 day EMA failed to generate any upward momentum for the daily bar chart pattern of FTSE 100.

After slipping down into bear territory below its three EMAs on Mon. Nov 9, the index tried to cling on to the 6300 level for a couple of days. Bears decided enough was enough.

Heavy selling dropped the index down to the 6100 level. On a weekly closing basis, the index lost 3.7%.

Technical indicators are in bearish zones and showing downward momentum. MACD has dropped inside negative zone. RSI is falling towards its oversold zone. Slow stochastic is well inside its oversold zone.

Note that the MACD signal line and 20 day EMA have formed ‘rounding top’ reversal patterns. Some more correction is likely.

On longer term weekly chart (not shown), the index closed well below its three weekly EMAs, and is probably entering a long-term bear market. The ‘death cross’ of the 50 week EMA below the 200 week EMA will provide the technical confirmation. Weekly MACD and RSI are in bearish zones. Slow stochastic is about to drop below its 50% level.

No comments: