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Monday, January 16, 2017

S&P 500 and FTSE 100 charts (Jan 13 '17): bulls are clearly on top

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 was in pause mode - trading within a 25 points range and closing just 2 points lower for the week. 

On Thu. Jan 12, the index dropped below its rising 20 day EMA to a low of 2254 intra-day, but bounced up to close near its much higher opening level of 2271 - forming a 'hammer' candlestick pattern.

Any bullish implications of the 'hammer' pattern were negated by the formation of a 'shooting star' candlestick on Fri. Jan 13 - showing honours were even between bulls and bears.

Daily technical indicators are in bullish zones but hinting at some more index consolidation before resumption of the up move. MACD is sliding down gently below its falling signal line. RSI and Slow stochastic are moving sideways.  

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market for the 45th week in a row. All three weekly technical indicators are looking overbought, but not showing much upward momentum.

FTSE 100 index chart pattern



The daily bar chart pattern of FTSE 100 is in the midst of a record-breaking and unprecedented bull run with 14 consecutive higher closes starting from Dec 22 '16.

At the time of writing this post, the index is trading 5 points higher - and well above its three EMAs in a bull market. A weakening UK Pound against the US Dollar, Japanese Yen and Euro has been propelling the index higher.

All three daily technical indicators are inside their respective overbought zones. Note that an index can remain overbought for long periods. But such a one-way rally without a correction is not technically 'healthy'. It reminds me of the story of Icarus.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market for the 29th week in a row. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index. 

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