Monday, April 17, 2017

S&P 500 and FTSE 100 charts (Apr 13 '17): consolidating after touching lifetime highs

S&P 500 index chart pattern

The following remarks were made in last week's post on the daily bar chart pattern of S&P 500: "Bears will have the upper hand till the index can move convincingly above the trend line. Daily technical indicators are moving sideways in neutral zones. Some more consolidation below the trend line is possible."

Bears continued to flex their muscles in a trading week truncated by Easter holidays. The index faced resistance from the (purple) down trend line and dropped to close below its 50 day EMA for the first time in 5 months.

The index is trading above its rising 200 day EMA in a bull market. However, daily technical indicators are in bearish zones and showing downward momentum. Some more consolidation or correction is likely.

A fall below the Mar 27 low of 2322 will extend the bearish pattern of 'lower tops, lower bottoms' and open up further downside towards the support zone between 2280 and 2300.

A hit-and-run foreign 'policy' - a few cruise missiles here, a MOAB there - has created jitters in world markets. North Korea is a wild card that may get 'Trump'ed next.

On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators have corrected overbought conditions, and are showing downward momentum.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 made a couple of abortive attempts to break out above the 'rectangle' pattern within which it has been consolidating for the past four weeks.

The index dropped to its rising 50 day EMA, only to bounce up and close just below its 20 day EMA. The 200 day EMA is rising, and the index closed well above it in a bull market.

As mentioned in last week's post, the index may break out either above or below the 'rectangle'. Since a 'rectangle' is often a continuation pattern, the logical break out is downwards.

Daily technical indicators are not giving clear signals. MACD and Slow stochastic are in bullish zones. RSI has slipped into bearish zone. A test of support from the lower edge of the 'rectangle' is a possibility.

On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but showing slight downward momentum.

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