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Monday, March 14, 2016

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Mar 11, 2016

S&P 500 index chart

The daily bar chart pattern of S&P 500 faced resistance from its 200 day EMA during the first four trading days of the week, but broke out upwards on Fri. Mar 11 '16 to close at its highest level in 2016.

The following comment was made in last week's post"If the index finds support around 1960 and bounces up, it will be a good buying opportunity." 

Note that the index touched an intra-day low of 1969 on Thu. Mar 10 - giving an entry opportunity.

The index gained 1.1% on a weekly closing basis, but Friday's upward breakout was not accompanied by a significant increase in volumes. 

All three technical indicators are looking overbought. Slow stochastic is showing negative divergence by failing to touch a new high with the index. 
Also, the sharp correction during Jan '16 has not yet been fully retraced.

There is a possibility that bears may become active. But dips are being used to buy - which is a sign of bull dominance. Some consolidation can be expected, if not a correction.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the first time in 2016. At the time of writing this post, the index is trading nearly 200 points above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are looking bullish.

FTSE 100 index chart

The following comment was made in last week's post on the daily bar chart pattern of FTSE 100: "A likely pullback and subsequent bounce up from the 6050 level can be a buying opportunity."

By closing below its 20 day EMA at 6037 on Thu. Mar 10 and subsequently bouncing up on Fri. Mar 11, the index did provide a buying opportunity. However, on a weekly closing basis, the index lost about 1%.

The index has been unable to overcome strong resistance from the 6200 level since the beginning of the month, and is trading below its 200 day EMA in a bear market.

Daily technical indicators are in bullish zones after correcting overbought conditions, but not showing much upward momentum. 

Some consolidation can be expected around current level before the index can make an attempt to breakout above its 200 day EMA.

On longer term weekly chart (not shown), the index closed above its 20 week EMA for the 2nd week in a row, but more than 150 points below its sliding 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are looking bullish, but MACD is still in negative zone and Slow stochastic is near its overbought zone.

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