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Monday, August 15, 2016

S&P 500 and FTSE 100 charts (Aug 12 '16): bulls take total control

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 consolidated within a narrow range during the week - touching a low of 2172 on Aug 10 and a new lifetime high of 2188 the following day.

Though the index barely gained a point on a weekly closing basis, it continues to trade above its three rising EMAs in a bull market.

Strong retail sales and payroll data have enabled bulls to remain in total control. However, there are some dark clouds on the horizon.

The index valuation is looking stretched. Daily technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.

The current consolidation phase may continue for a bit before the index tries to move up again.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market for the 23rd week in a row, but has formed a 'doji' candlestick pattern that may trigger a correction. Weekly technical indicators are looking overbought.

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 shows that bulls have shrugged aside bearish technical signals and have taken total control of the chart.

The index gained almost 2% for the week, closing above the 6900 level after more than 14 months.

All three daily technical indicators are looking overbought, and MACD is showing negative divergence by failing to touch a new high with the index.

FTSE is trading well above its three rising EMAs in a bull market. The rally from the BrExit low in Jun '16 has been a little too steep.

Bulls are in no mood to give bears any opportunities. However, some consolidation or correction - should either happen - will improve the technical 'health' of the chart. 

On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the 7th week in a row. The 'golden cross' of the 50 week EMA above the 200 week EMA has technically confirmed a return to a long-term bull market. Weekly technical indicators are looking quite overbought, which can trigger a correction at any time.

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