Monday, December 24, 2018

S&P 500 and FTSE 100 charts (Dec 21, 2018): bears have total control

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 shows how technical analysis signals can sometimes be self-fulfilling. The index made a strong 62% gain (~1131 points) during its 33 months long rally from the Feb 11 '16 low of 1810.10 to the Sep 21 '18 top of 2940.91.

Almost half of those gains (532.36 points; 47%) got wiped out in just 3 months when the index touched an intra-day low of 2408.55 on Dec 21 '18. Note how the bottom seems to have fallen out of the index after the bearish 'death cross' (of the 50 day EMA below the 200 day EMA) on Dec 10th.

Daily technical indicators are looking oversold. MACD is falling deep inside its oversold zone. RSI is also falling inside its oversold zone. Slow stochastic has dropped well inside its oversold zone. Bears have taken complete control of the chart.

The 50% Fibonacci retracement level of the 33 months long rally (from Feb '16 low to Sep '18 top) is at 2375. Expect bulls to put up a fight to defend that level. But the fight may not last long when bears are on the rampage.

On longer term weekly chart (not shown), the index dropped to test support from its 200 week EMA for the first time since Feb '16. A spike in trading volumes is possibly an indication of a 'selling climax'. A technical bounce may follow. Weekly technical indicators are looking oversold and showing negative divergences by falling below their Feb '16 lows. 

FTSE 100 index chart pattern



The daily bar chart pattern of FTSE 100 continued its corrective move, and touched a 2 years low of 6646 on Thu. Dec 20 but managed to close above 6700. 

On Fri. Dec 21, the index formed an 'inside day' candlestick pattern (lower high, higher low) - which indicates indecision among bulls and bears - and closed slightly higher. On a weekly closing basis, the index lost 124 points (1.8%).

BrExit uncertainty is increasing by the day, and the British PM's prospects of getting her BrExit deal through Parliament are looking bleak.

Daily technical indicators are bearish. MACD is sliding down below its signal line in bearish zone. RSI is falling below its 50% level. Stochastic is inside its oversold zone

All three indicators showed positive divergences by not falling lower with the index. But don't expect a rally anytime soon, as bears are selling on every rise.

On longer term weekly chart (not shown), the index closed below its three weekly EMAs in long-term bear territory, but appears to have found temporary support at 6700. Weekly technical indicators are bearish and showing downward momentum. MACD and Stochastic are falling inside their respective oversold zones. RSI is seeking support from the edge of its oversold zone.

(Wishing all blog followers, visitors, subscribers, twitter followers Season's Greetings and a very happy and prosperous New Year.)   

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