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Monday, July 31, 2017

S&P 500 and FTSE 100 charts (Jul 28 '17): bears make their presence felt

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 continued to ignore the previous week's overbought technical conditions and negative divergences on MACD and RSI. 

It rose to touch a new high of 2484 on Thu. Jul 27, only to fall to 2460 before bouncing up - forming a 'reversal day' bar (higher high, lower close). The index closed absolutely flat for the week.

Daily technical indicators are in bullish zones but turning a bit bearish. MACD is forming a 'rounding top' reversal pattern. RSI and Slow stochastic are showing negative divergences by failing to touch new highs with the index, and are moving down.

Any further correction is likely to receive support from the zone between 2450-2460. In case the support zone is breached on the downside, expect stronger support from the rising 50 day EMA.

Strong volume bars on down-days during the past 4 months is an indication that 'smart money' is regularly booking profits. 

On longer term weekly chart (not shown), the index touched a new high - well above its three rising weekly EMAs in a long-term bull market - but formed a 'doji' candlestick pattern that suggests indecision among bulls and bears. Weekly technical indicators are looking overbought.

FTSE 100 index chart pattern


Bulls and bears continued their fight for control of the 7385 'support-resistance' level on the daily bar chart pattern of FTSE 100. Bears had the upper hand last week.

The index dropped to close just below 7385 on Mon. Jul 24. It bounced up to try and breach resistance from the (purple) down trend line on Wed. Jul 26, but failed. The index dropped again to close at 7368 - losing 1.1% on a weekly closing basis.

Note that the down trend line has been tested three times during the past 2 months. Unlike support/resistance levels, which get 'weakened' by each test, trend lines get 'stronger' with each test. 

Daily technical indicators are looking bearish and showing downward momentum. Though the index is trading above its rising 200 day EMA in a bull market, expect bears to dominate for a while.

On longer term weekly chart (not shown), the index closed just above its 20 week EMA and is trading above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but not showing any upward momentum.

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