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Monday, December 26, 2016

S&P 500 and FTSE 100 charts (Dec 23 '16): bulls are in control

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 has been consolidating sideways within a small 'symmetrical triangle' pattern for the past two weeks. All three EMAs are rising, and the index is trading above them in a bull market.

Logically, the index should breakout upwards from the triangle. However, triangles tend to be unreliable patterns. A breakout can also occur downwards, or, the triangle can get negated if the price moves sideways through the apex.

Christmas holidays and the New Year has caused a slide in volumes - as it does every year. It may be a good idea to sit back and relax with the family, and wait for the price action to signal which way the index wants to move next. 

Daily technical indicators are correcting overbought conditions. MACD and Slow stochastic are still inside their respective overbought zones. RSI has slipped down from its overbought zone.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market for the 42nd week in a row. All three weekly technical indicators are in bullish zones but looking overbought.

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 has crawled up on rapidly diminishing volumes (not shown) to close with a 0.8% weekly gain. All three EMAs are rising, and the index is trading above them in a bull market.

Year-end holidays and proximity to the lifetime high (touched in Oct '16) kept trading activity on a low key. But bulls are clearly in control.

Daily technical indicators are looking bullish  and overbought. Remember that the index can remain overbought for long periods during bull markets.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market for the 26th week in a row. Weekly technical indicators are looking bullish. 

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