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Monday, April 25, 2016

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 22, 2016

S&P 500 index chart


The daily bar chart pattern of S&P 500 shows a continuation of the rally from the Feb '16 low. The index rose above its Dec '15 top but stopped just short of its Nov '15 top before correcting a bit.

The periodic small corrections that received good support from the rising 20 day EMA have kept the chart technically 'healthy'. The 'golden cross' of the 50 day EMA above the 200 day EMA signalled a return to a bull market.

Daily technical indicators are in bullish zones but showing downward momentum. MACD, RSI and ROC (not shown) failed to touch new highs with the index. The combined negative divergences probably triggered the correction from the Apr 20 top of 2111. 

On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the 7th week in a row. The index is trading more than 250 points above its rising 200 week EMA in a long-term bull market. The 20 week EMA has just crossed above the 50 week EMA. Weekly technical indicators are in bullish zones, but Slow stochastic is overbought.

FTSE 100 index chart


The following comments appeared in last week's post on the daily bar chart pattern of FTSE 100: "Bulls will need to overcome strong resistance from the zone between 6400-6500 if they wish to regain control of the chart." 

Note that the index entered the resistance zone and touched an intra-day high of 6427 on Apr 21 '16 - stopping short of its Dec '15 top by 20 points. After forming a 'reversal day' pattern (higher high, lower close), the index dropped to seek support from its 20 day EMA.

FTSE spent the entire week above its three EMAs in bull territory. The 20 day EMA has crossed above the 200 day EMA - after falling below it more than 9 months ago. The 'golden cross' of the 50 day EMA above the 200 day EMA is still awaited.

Daily technical indicators are in the process of correcting overbought conditions, but remain in bullish zones. Some more correction or consolidation is possible before the rally resumes. 

On longer term weekly chart (not shown), the index formed a 'reversal bar' (higher high, lower close) and slipped below its 200 week EMA. However, it closed above its 20 week and 50 week EMAs. Weekly technical indicators are looking bullish. 

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