Monday, October 1, 2018

S&P 500 and FTSE 100 charts (Sep 28, 2018): bears trying to make life difficult for bulls

S&P 500 index chart pattern

Possibility of a corrective move towards the lower Bollinger Band was mentioned in last week's post on the daily bar chart pattern of S&P 500. Instead, the index found support at its 20 day SMA (blue dotted line) and consolidated sideways - losing about 16 points (0.5%) on a weekly closing basis.

The index is trading well above its rising 50 day and 200 day EMAs in a bull market, but closed lower in 4 out of 5 trading days during the week. Despite trading near a lifetime high, the index is facing difficulty in shaking the bears off.

Daily technical indicators are in bullish zones, but showing downward momentum. MACD has slipped below its signal line. RSI has fallen towards its 50% level. Slow stochastic has dropped from its overbought zone. A correction towards the lower Bollinger Band remains 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 looking overbought, and not showing any upward momentum.  

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 managed to prevent the 'death cross' of the 50 day EMA below the 200 day EMA by closing above all three EMAs in bull territory, gaining about 20 points (0.3%) on a weekly closing basis.

The merged 50 day and 200 day EMAs have put the brakes on the index rally. At the time of writing this post, the index is trading just 6 points higher.

Daily technical indicators are not giving bulls much hope. MACD is above its rising signal line, but its upward momentum has slowed after entering bullish zone. RSI's up move has stalled after crossing above its 50% level. Stochastic has begun to correct inside its overbought zone.

Expect the index to consolidate a bit longer before it can make a decisive directional move. The three EMAs are converging - a technical condition that is usually a harbinger of a sharp up or down move.

On longer term weekly chart (not shown), the index closed just below its 20 week EMA but above its 50 week and 200 week EMAs in a long-term bull market. Weekly MACD is moving sideways in neutral zone. RSI and Stochastic are also moving sideways near their respective 50% levels.

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