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Monday, June 27, 2016

S&P 500 and FTSE 100 index charts - Jun 24 '16

S&P 500 index chart

Readers were given adequate warning with the following comments in last week's post on the daily bar chart pattern of S&P 500: "A further correction to test support from the 200 day EMA is possible. If the May 19 low of 2026 gets breached, the index can fall to 2000."

The index rallied during the first 4 days of the week, touching a lower top, before collapsing on huge volumes on Fri. Jun 24 due to the unexpected BrExit referendum in UK.

The 200 day EMA was breached intra-day on Friday. Though the index managed to close exactly on its long-term moving average, it lost 1.6% for the week. The May 19 low of 2026 was tested but not breached - giving bulls some hope. 

The hope may be short-lived. All three daily technical indicators have dropped into bearish zones - hinting at a further correction.

Till the dust settles and ramifications of the BrExit vote becomes clear, bears may opt to sell on every rise.

On longer term weekly chart (not shown), the index received good support from its 50 week EMA, and closed well above its 200 week EMA in a long-term bull market for the 16th week in a row. Weekly technical indicators are turning bearish.

FTSE 100 index chart

The daily bar chart pattern of FTSE 100 rallied sharply above its three EMAs back into bull territory and touched a 2 months high of 6381 on Thu. Jun 23.

The bottom fell out of the market due to the unexpected BrExit vote. The index plunged to an intra-day low of 5789 on Fri. Jun 24, but recovered 350 points to close at 6139 with a 2% weekly gain.

Bulls should temper their celebrations. At the time of writing this post, the index is trading 50 points lower and below all three EMAs in bear territory.

Daily technical indicators are looking bearish. MACD and RSI are falling in bearish zones. Slow stochastic has dropped from its overbought zone.

There is a concern that UK may slip back into recession. Bears are likely to use it as an excuse to sell.

On longer term weekly chart (not shown), the index moved above its three weekly EMAs into bull territory intra-week, but dropped to close below all three EMAs in a long-term bear market for the 10th week in a row. Weekly technical indicators are in bearish zones. 

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