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Monday, July 4, 2016

S&P 500 and FTSE 100 index charts - Jul 01 '16

S&P 500 index chart


The daily bar chart pattern of S&P 500 dropped sharply below its 200 day EMA and the 2000 level into bear territory on Mon. Jun 27 '16 as BrExit concerns dominated market sentiments.

Monday's strong volumes after Friday's huge volume surge resulted in a 'selling climax' that bulls used to their advantage. The index rallied strongly during the rest of the week, closing above its three EMAs and the 2100 level in bull territory.

The market appears to have digested BrExit concerns and come to the logical conclusion that any economic fallout will be long-term in nature and won't have any short-term impact on the market.

Daily technical indicators are looking bullish. MACD is about to cross above its signal line and enter positive zone. RSI has moved above its 50% level but not showing much upward momentum. Slow stochastic has just entered its overbought zone.

Bulls have managed to recover all the losses suffered during the 2-day BrExit crash. Bears may point out that since Apr '16, the index has formed a 'broadening top' pattern (higher tops, lower bottoms) with bearish implications.

It may be a good idea to sit on the sidelines as the index oscillates wildly - triggering stop-losses in both directions.  

On longer term weekly chart (not shown), the index dropped below its 20 week and 50 week EMAs, but recovered to close well above its three weekly EMA in a long-term bull market for the 17th week in a row. Weekly technical indicators are in bullish zones.

FTSE 100 index chart


The daily bar chart pattern of FTSE 100 traded below its three EMAs in bear territory on Mon. Jul 27, and closed below the 6000 level.

Bulls concluded that the selling on BrExit concerns was overdone and initiated a strong 4-day rally that took the index to an 11 months high above the 6550 level.

The 20 day EMA has crossed above the 200 day EMA once again. The imminent 'golden cross' of the 50 day EMA above the 200 day EMA will technically confirm a return to a bull market.

Daily technical indicators are in bullish zones, but looking overbought. The 4-day rally was backed by strong volumes (not shown), but some correction or consolidation will improve the technical 'health' of the chart.

Any dip towards the zone between 6400-6450 and a subsequent upward bounce can be used as an adding opportunity.

On longer term weekly chart (not shown), the index traded below its three weekly EMAs in bear territory intra-week, but bounced up to close well above all three EMAs in a long-term bull market after 10 weeks. Weekly technical indicators are in bullish zones. 

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