S&P 500 and FTSE 100 charts (Mar 15, 2019): trying to overcome resistance levels

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 shows that bulls are trying their best to break free from bear domination. The index bounced up after receiving support from its 50 day EMA, and made another attempt to climb above the resistance zone (between 2800 and 2825).

After a brief setback on Thu. Mar 14, the index rose to touch an intra-day high of 2831 - its highest level in 5 months - but failed to sustain above the resistance zone. 

The index closed above its three EMAs in a bull market, gaining 2.9% on a weekly closing basis. Friday's volume spike may be a sign of a 'buying climax'.

Daily technical indicators are looking bullish. MACD is ready to cross above its falling signal line in bullish zone. RSI is rising towards its overbought zone. Slow stochastic is inside its overbought zone. 

All three indicators are showing negative divergences by failing to touch new highs with the index. Some consolidation or correction may follow.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the seventh week in a row. Weekly MACD has entered bullish zone. RSI has bounced up after receiving support from its 50% level. Slow stochastic is inside its overbought zone.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 received good support from its rising 50 day EMA on Tue. Mar 12, and rose to touch an intra-day high of 7244 on Fri. Mar 15 - but failed to overcome strong resistance from its 200 day EMA.

The index gained 1.7% on a weekly closing basis. However, the volume spike on Friday may be a sign of a 'buying climax'.

Daily technical indicators are looking bullish. MACD is poised to cross above its falling signal line in bullish zone. RSI is rising above its 50% level. Stochastic has entered its overbought zone. FTSE may make another attempt to cross above its 200 day EMA. 

Uncertainty regarding the BrExit process continues. The British PM may ask for an extension of time (beyond Mar 29) at the EU summit on Mar 21.

On longer term weekly chart (not shown), the index received support from its 20 week EMA and bounced up to close above its three weekly EMAs in long-term bull territory. 

Weekly technical indicators are looking bullish. MACD is rising above its signal line in bearish zone. RSI has bounced up after receiving support from its 50% level. Stochastic has re-entered its overbought zone.

Gold and Silver charts: remain range-bound

Gold chart pattern

For the past 4 months, the daily bar chart pattern of Gold has consolidated sideways between the 'Support zone' (1300-1310) and the 'Resistance zone' (1360-1370). 

As the entire consolidation has occurred above the rising 200 day EMA in a bull market, the likely breakout should be upwards. It may be prudent to wait for the breakout before deciding to buy/sell.

Gold's price had shot up to the upper edge of the 'resistance zone' with a volume surge on Apr 11 - its highest level in 18 months. Negative divergences visible on the technical indicators, which failed to touch new highs, triggered a correction down to the upper edge of the 'support zone'. (The possibility was mentioned in the previous post.)

Daily technical indicators are in bearish zones. MACD is falling below its signal line. RSI is moving sideways below its 50% level. Slow stochastic is inside its oversold zone.

RSI and Slow stochastic are showing positive divergences by not falling lower with gold's price. A technical bounce towards the converging 20 day and 50 day EMAs may follow.

On longer term weekly chart (not shown), gold’s price closed below its 20 week EMA but above its 50 week and 200 week EMAs in long-term bull territory.  Weekly technical indicators are looking neutral to bearish. MACD is falling below its signal line in bullish zone. RSI is in neutral zone. Slow stochastic is falling below its 50% level. More sideways consolidation is likely.

Silver chart pattern

Contrary to expectations, the daily bar chart pattern of Silver broke out above its 200 day EMA and the 'resistance zone' (between 16.90 and 17) on Apr 18 with a volume surge that often signals a 'buying climax'.

The next day, a 'reversal day' bar (higher high, lower close) with good volume support triggered a sharp correction all the way down to the upper edge of the 'support zone' (between 16.10 and 16.20).

Despite occasional forays into bull territory, silver's price remains in the firm grip of bears. More sideways consolidation between the 'support zone' and the 'resistance zone' is likely.

Daily technical indicators are looking bearish. MACD has fallen to its neutral zone. RSI is below its 50% level. Slow stochastic has entered its oversold zone.

On longer term weekly chart (not shown), silver’s price closed below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones.

Gold and Silver charts: sideways consolidations continue

Gold chart pattern

The daily bar chart pattern of Gold continued its sideways consolidation between the 'Support zone' (1300-1310) and the 'Resistance zone' (1360-1370). The consolidation has entered its 4th month.

The entire consolidation has occurred above the rising 200 day EMA in a bull market. So, the logical break out from the consolidation should be upwards. But markets don't always follow or understand logic - at least in the near term.

Note that gold's price made a futile attempt to cross above the 'resistance zone' on Wed. Apr 11, and dropped to close at 1360 (lower edge of the 'resistance zone'). The accompanying volume surge may be a sign of 'buying climax'.

Gold's price corrected below its rising 20 day EMA intra-day on Fri. Apr 13, but bounced up to close above its three rising EMAs in bull territory.

Daily technical indicators are giving conflicting signals - which is often the case during periods of consolidation. MACD is showing slight upward momentum in bullish zone. RSI is moving sideways above its 50% level. Slow stochastic has fallen to its 50% level. 

RSI and Slow stochastic touched lower tops on Apr 11 while gold's price rose higher. The negative divergences can trigger a corrective move towards the 'support zone'.

On longer term weekly chart (not shown), gold’s price closed above its three rising weekly EMAs in long-term bull territory.  Weekly technical indicators are in bullish zones, but not showing any upward momentum. Some more consolidation is likely.

Silver chart pattern

The following remarks were made in the previous post on the daily bar chart pattern of Silver: "A rally above the 200 day EMA is a possibility. Bears are likely to use the opportunity to sell again."

Silver's price rallied above its sliding 200 day EMA intra-day on Wed. Apr 11, only to face strong resistance from the 16.90 level (lower edge of the 'resistance zone') and closed just below the 200 day EMA.

On Apr 12, silver's price faced selling pressure and closed below its three EMAs in bear territory. It has since bounced up above its 20 day and 50 day EMAs.

The sideways consolidation between the 'Support zone' (16.10-16.20) and the 'Resistance zone' (16.90-17.00) has entered its 3rd month. The longer the consolidation, the stronger can be the eventual break out.

The entire consolidation has occurred below the sliding 200 day EMA in a bear market. So, the logical break out from the consolidation should be downwards. However, it may be prudent to wait for the break out before taking any buy/sell decision.

Daily technical indicators are in bullish zones, but not showing any upward momentum and hinting at some more consolidation.

On longer term weekly chart (not shown), silver’s price closed at its 20 week EMA, but below its sliding 50 week and 200 week EMAs in a long-term bear market. Weekly MACD and Slow stochastic are in bearish zones. RSI is in neutral zone.

Sensex, Nifty charts (Dec 29, 2017): close the year at lifetime highs

FIIs were net sellers of equity worth Rs 64.1 Billion for the month of Dec '17. It was their 5th straight month of net selling. They were net sellers in 9 of the previous 12 months.

DIIs were net buyers of equity worth Rs 81.4 Billion during Dec '17, as per provisional figures. They were net buyers of equity in 11 of the past 12 months. Sensex gained 7430 points (27.9%) and Nifty gained 2345 points (28.6%) during calendar year 2017.

India's fiscal deficit during Apr-Nov 2017 was Rs 6120 Billion, which touched 112% of the budget estimate for the period Apr 2017-Mar 2018. During Apr-Nov 2016, the fiscal deficit was 85.8% of the budget estimate. Lower GST collections and higher expenditure inflated the deficit.

BSE Sensex index chart pattern

The following remark was made in last week's post on the daily bar chart pattern of Sensex: "Sensex is trading above its three rising EMAs in a bull market, and should continue to move higher on the back of liquidity inflows into domestic mutual funds."

In F&O settlement trading week truncated by Christmas holiday on Mon., the index touched a new intra-day high of 34138 on Wed. Dec 27 and ended the week, month and year at a new closing high of 34057 on Fri. Dec 29.

Daily technical indicators are looking bullish. MACD is rising above its signal line in bullish zones. ROC, RSI and Slow stochastic are in the process of correcting overbought conditions.

The index is trading above its three rising EMAs in a bull market. However, the move above the 'flag' has been more of a sideways consolidation with an upward bias rather than a full-fledged rally.

Festive season considerations and uncertainty about forthcoming Q3 (Dec '17) corporate results kept bulls in check. Earnings growth of India Inc. may show improvement because Q3 (Dec '16) corporate results were badly affected by demonetisation of high value currency.

Any pullback towards the top of the 'flag' can be used to add to existing holdings. But there is no point in waiting for such a pullback because it may not happen. So, keep investing according to your asset allocation plans.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rose to touch new intra-week (10552) and closing (10531) highs during the last week of trading in 2017. The index is trading above its three rising weekly EMAs in a bull market.

Is it time for bears to go into hibernation? Not yet. The index formed a 'doji star' weekly candlestick with a volume surge, which can be a sign of a 'buying climax'. A pullback towards the top of the 'flag' may be in the offing.

Note that a 'buying climax' is often followed by a correction, but seldom occurs at a market top. It is usually followed by a move to new highs. (Note the index behaviour following the previous 'buying climax' in the last week of Jul '17 - marked by red arrow.)

Nifty's TTM P/E has increased to 26.92 - well above its long-term average. The breadth indicator NSE TRIN (not shown) has fallen deep inside its overbought zone, and can trigger a correction. (Coincidentally, the previous occasion when TRIN looked so overbought was in the last week of Jul '17.)

Bottomline? Sensex and Nifty charts have closed at lifetime highs after breaking out above bullish 'flag' patterns in the previous week. Both indices appear to be hesitating before Q3 (Dec '17) results season. Lower base effect can lead to some earnings growth in Q3. Any pullbacks towards the top of the 'flag' patterns can be used to add to existing holdings.

S&P 500 and FTSE 100 charts (Dec 15 '17): bulls keep charging ahead

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 faced a brief dip on Wed. & Thu. (Dec 13 & 14), which was gleefully bought by bulls. The index rose to touch another new high of 2680 on Fri. Dec 15 - on the back of a sharp rise in volumes - before closing slightly lower.

All three EMAs are rising and the index closed well above them in a bull market with a weekly gain of 0.9%. However, the volume spike on Fri. may be the sign of a buying climax. 

Investors pulled $16.2 billion from U.S.-based equity funds during the latest week, according to Lipper on Thu. Dec 14, marking the largest withdrawals since December 2016.

Daily technical indicators are looking bullish but overbought. An index can remain overbought for long periods. Negative divergences visible on RSI and Slow stochastic (both failed to touch new highs with the index) can lead to another corrective dip.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought. Slow stochastic failed to touch a new high with the index, and can trigger a correction towards the rising 20 week EMA. 

FTSE 100 index chart pattern

For the third time in 3 months, the daily bar chart pattern of FTSE 100 attempted a breakout above the (purple) down trend line that has dominated the chart since early Jun '17.

The index rose to touch a high of 7511 on Wed. Dec 13 but formed a small 'reversal day' (higher high, lower close) bar that triggered a pullback to the down trend line on Fri. Dec 15. 

However, the index bounced up from the trend line to form a large 'reversal day' (lower low, higher close) bar, and closed with a weekly gain of 1.3%.

Daily technical indicators are looking bullish. MACD has entered positive zone after a month. RSI is above its 50% level. Slow stochastic is moving down inside its overbought zone, and can limit index upside. (At the time of writing this post, the index is trading above its Wed. top of 7511.) 

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

S&P 500 and FTSE 100 charts (Sep 15 '17): bulls rule one, bears rule the other

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: 

"The index may be in the process of forming a 'diamond' pattern. A 'diamond' can be a reversal pattern or a continuation pattern. So, await the breakout before deciding to buy or sell. An upward breakout above 2480 will be bullish. A downward breakout below 2440 will be bearish."

On Mon. Sep 11, the index opened trading with an upward 'gap' and broke out above the 'diamond' pattern and the 2480 level. It closed just below 2490. During the rest of the week, the index consolidated sideways with an upward bias, and closed at a lifetime high of 2500 - with a gain of 1.6% on a weekly closing basis.

Note the large spike in volume on Fri. Sep 15. That may be the sign of a 'buying climax' that can lead to a pullback towards the 'diamond' pattern. Such a pullback will provide a buying opportunity to those who missed buying on the upward break out.

Daily technical indicators are in bullish zones. MACD is rising above its signal line in overbought zone. RSI is moving sideways below its overbought zone. Slow stochastic is well inside its overbought zone. MACD and RSI are showing negative divergences by failing to touch new highs with the index.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern

The following remark in last week's post on the daily bar chart pattern of FTSE 100 provided adequate warning to investors: "A likely downward breakout below 7300 can lead to a test of support from, or even a breach of, the 200 day EMA."

The index made a couple of futile attempts to move above the (purple) down trend line on Mon. Sep 11 & Tue. Sep 12. Bears took control right away.

On Thu. Sep 14, the index dropped and closed just below the support level of 7300. On Fri. Sep 15, the index fell sharply below the 200 day EMA and the 7200 level intra-day, before managing to close above 7200 - with a loss of 2.2% on a weekly closing basis.

(At the time of writing this post, the index is in the process of pulling back towards the 200 day EMA. Those who missed selling on Friday's downward break out can use the pullback as a selling opportunity.)

Daily technical indicators are looking bearish and showing downward momentum. Some more correction - perhaps a test of the Apr '17 low of 7100 - is possible.

On longer term weekly chart (not shown), the index dropped below its 20 week EMA and is seeking support from its 50 week EMA, but closed well above its 200 week EMA in a long-term bull market. Weekly MACD is falling below its signal line in bullish zone. RSI has fallen below its 50% level. Slow stochastic has re-entered its oversold zone.

Hang Seng Index Chart Pattern - May 29, '09

Last week's Hang Seng index chart pattern looked like it was getting ready for a correction because of the dip in volumes and the weakness of the technical indicators. The index was near its 20 day EMA, which had provided support ever since it was penetrated in Mar '09.

The 3 months bar chart pattern of the Hang Seng index will show that the 20 day EMA provided strong support once again:-

(Please right-click on the image; open it in a new tab or window for a better view.)

The upward bounce from the short-term average wasn't entirely unexpected. But the striking feature was the sudden upsurge in volumes.

Volume is supposed to move with the index, and go up when the index moves up.  However, a sudden increase in volumes can also indicate a 'buying climax' which indicates the formation of a market top. This usually happens at the end of a fairly long rally - just like the one we have had so far.

Unfortunately, technical analysis can't distinguish the difference between a surge in demand from genuine investors, and a desire by market operators - particularly bears - to create a temporary  buying surge to trap the bulls.

Next week's trading ought to clear up the mystery of the sudden volume increase. The slow stochastic has moved back into the overbought zone. The MACD, ROC, RSI have all risen with the index. But all the indicators have made lower highs. This is a negative divergence between the Hang Seng index and its technical indicators.

Bottomline? Time to be a little cautious. Let your profits ride, but keep maintaining trailing stop losses on your stock investments. Partial profit booking is also recommended.