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Monday, June 20, 2016

Stock Index Chart Patterns: S&P 500 and FTSE 100 - Jun 17, 2016

S&P 500 index chart


The daily bar chart pattern of S&P 500 corrected below its 20 day and 50 day EMAs, touching an intra-day low of 2050 on Thu. Jun 16. It recovered to close exactly on its 50 day EMA.

Status quo on interest rates by the US Fed triggered the recovery. Though the index lost 1.2% on a weekly closing basis, it is trading above its rising 200 day EMA in bull territory.

Daily technical indicators are looking bearish. MACD is falling below its signal line in positive zone, and is likely to drop inside negative zone soon. RSI is moving sideways below its 50% level. Slow stochastic is just above its oversold zone.

The 50 day EMA provided good support on a closing basis in spite of being breached thrice on intra-day basis during the week. 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.

On longer term weekly chart (not shown), the index received good support from its 20 week EMA, and closed above its three weekly EMAs in a long-term bull market for the 15th week in a row. Weekly technical indicators are in bullish zones but showing some downward momentum.

FTSE 100 index chart


The following comment appeared in last week's post on the daily bar chart pattern of FTSE 100: "A possible fall below the 6050 level will confirm a bearish pattern of 'lower tops, lower bottoms'."

The index dropped and closed below the 6050 level on Mon. Jun 13 and remained below 6050 for the rest of the week, losing 1.5% on a weekly closing basis.

On Fri. Jun 17, the index bounced up with a volume surge (not shown) but failed to overcome resistance from the 6050 level. Bears may use the pullback to sell.

Daily technical indicators are trying to correct oversold conditions. MACD has slipped inside its oversold zone but has stopped falling. RSI has bounced up from the edge of its oversold zone. Slow stochastic is trying to emerge from its oversold zone.

All three EMAs are falling, and the index is trading below them in a bear market. The 'BrExit' referendum next week is hanging over the market like the proverbial 'Sword of Damocles'.

On longer term weekly chart (not shown), the index stayed below its three weekly EMAs in a long-term bear market for the 9th week in a row. Weekly technical indicators are bearish - hinting at more correction. 

2 comments:

Subhankar said...

The IMF Cuts 2016 U.S. Economic Growth Forecast

http://www.investopedia.com/articles/investing/062316/imf-cuts-2016-us-economic-growth-forecast.asp

Subhankar said...

Which Brokers Are Anticipating a Bear Market?

http://www.investopedia.com/articles/markets/062116/which-brokers-are-anticipating-bear-market-gs-jpm.asp