Monday, May 14, 2018

S&P 500 and FTSE 100 charts (May 11, 2018): bulls regaining lost ground

S&P 500 index chart pattern

Note the following comment in last week's post on the daily bar chart pattern of S&P 500: "Daily technical indicators are looking bearish to neutral, but showing slight upward momentum that is hinting at some more upside." 

The index corrected a bit on Tue. May 8 but bounced up after finding good support from its 20 day EMA. On Thu. May 10, the index crossed above the (green) down trend line with an upward 'gap' and closed above 'GAP 3' (refer last week's post).

The bulls still have a lot of work left, as 'GAP 2' is likely to provide resistance. The index appears to be consolidating within a bearish 'Flag' pattern whose upper edge can also provide resistance.

All three EMAs are rising, and the index is trading above them in a bull market. However, sliding volumes during last week's rally should be a concern for bulls - more so because recent down-day volumes have been quite high. 

Daily technical indicators are looking bullish and showing upward momentum. Slow stochastic is well inside its overbought zone, and can trigger a correction, or at least a pullback towards the down trend line.

Bulls are regaining lost ground, but bears are making their life as difficult as possible.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market. Weekly MACD has stopped falling below its signal line in bullish zone. RSI has moved above its 50% level. Slow stochastic is poised to do the same.

FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 easily crossed above the long-term resistance zone between 7565 and 7582, and closed the week at 7724 with a 2.1% weekly gain. It was the highest closing level in more than 3 months.

FTSE's lifetime closing high of 7779 (on Jan 12) is within handshaking distance of 55 points. The 'golden cross' of the 50 day EMA above the 200 day EMA (marked by blue circle) has technically confirmed a return to a bull market.

All three daily technical indicators are well inside their overbought zones. Though an index can remain overbought for long periods, caution is advised near a lifetime high as profit booking can ensue at any time.

Any pullback towards the resistance zone between 7565 and 7582 will improve the technical 'health' of the chart, and can be used as a buying opportunity.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market. Weekly MACD is rising in bullish zoneRSI is about to cross above its 50% level. Slow stochastic is well inside its overbought zone and can trigger a correction.

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