S&P 500 and FTSE 100 charts (Mar 16, 2018): bulls forced to retreat

S&P 500 index chart pattern

The following remark was made in last week's post on the daily bar chart pattern of S&P 500: "It may be a bit early for bulls to start celebrating." 

The index rose past its Feb 27 top of 2789 to touch an intra-day high of 2802 on Tue. Mar 13 but closed much lower, forming a 'reversal day' bar that triggered a pullback to the top of the 'triangle'.

The index touched an intra-day low of 2741 on Thu. Mar 15, but bounced up to close just above the 2750 level on Fri. Mar 16 - forming an 'inverted hammer' candlestick. The accompanying volume surge is often a sign of trend reversal.

Daily technical indicators are in bullish zones but not showing any upward momentum. MACD is moving sideways above its signal line. RSI is trying to rise after receiving support from its 50% level. 

Slow stochastic is showing negative divergence by touching a lower top and forming a 'double top' reversal pattern inside its overbought zone. Bears may try to press home their advantage.

The index is trading well above its rising 200 day EMA in a long term bull market. However, the sharp volatility during the past 6 weeks should be treated with caution.

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

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 failed to overcome resistance from its falling 20 day EMA, and dropped below the long-term 'support/resistance' level of 7200.

The index is trading below its three EMAs in a bear market that was technically confirmed by the 'death cross' (blue circle) of the 50 day EMA below the 200 day EMA.

Daily technical indicators are showing upward momentum. However, all three are in bearish zones. (At the time of writing this post, the index is trading below 7100.)

The 'double bottom' pattern may get tested.

On longer term weekly chart (not shown), the index closed below the support level of 7200. It remains below its 20 week and 50 week EMAs but above its 200 week EMA in a long-term bull market. Weekly MACD and Slow stochastic are inside their oversold zones. RSI is falling below its 50% level.

WTI and Brent Crude Oil charts: prices tumble on rise in US output

WTI Crude Oil chart

Some consolidation or correction was expected in the previous post on the daily bar chart pattern of WTI Crude Oil, due to overbought technical indicators which were showing negative divergences.

Oil's price initially corrected to an intra-day low of 63.67 on Jan 31; bounced up after receiving support from its 20 day EMA, and closed higher - forming a 'reversal day' bar (lower low, higher close). 

By touching a lower top of 66.30 on Feb 2 and closing lower, oil's price formed a 'reversal day' bar (slightly higher high, lower close) and a small 'double top' reversal pattern.

That was a trigger for bears to go on the rampage. Oil's price dropped vertically below its 20 day and 50 day EMAs, with strong volumes, to an intra-day low of 58 on Fri. Feb 9 - falling nearly 12.5% in a week.

Daily technical indicators are looking bearish and a bit oversold. That led to a technical bounce on Mon. Feb 12, and the formation of an 'inverted hammer' candlestick pattern, which can cause a pullback towards the 50 day EMA.

Iran announced plans to boost production and US crude output hit record highs, adding to concerns about a sharp rise in global supplies.

On longer term weekly chart (not shown), oil's price pulled back sharply to its 200 week EMA and bounced up a little after receiving support. Weekly technical indicators are correcting overbought conditions and showing downward momentum. Some more correction is likely.

Brent Crude Oil chart

The daily bar chart pattern of Brent Crude Oil closed just below its 20 day EMA on Jan 30, but formed a 'reversal day' bar (lower low, higher close) on Jan 31 and bounced up to touch an intra-day high of 70 on Feb 2.

Formation of another 'reversal day' bar (slightly higher high, much lower close) triggered a sharp correction below the 20 day and 50 day EMAs to an intra-day low of 61.77 - a fall of 13.3% from the Jan 25 high of 71.28.

Daily technical indicators are looking bearish and oversold. Oil's price formed an 'inverted hammer' candlestick pattern on Mon. Feb 12. A technical bounce is a possibility. 

Bears are likely to 'sell on rise'. A test of support from the 200 day EMA may be on the cards.

On longer term weekly chart (not shown), oil's price has pulled back sharply to its 200 week EMA. Weekly technical indicators have corrected overbought conditions and are showing downward momentum - hinting at more correction. 

Sensex, Nifty charts: bulls and bears struggle for domination (Dec 02, 2016)

As per provisional figures, FIIs were net sellers of equity worth Rs 31.8 Billion while DIIs were net buyers of equity worth Rs 22.6 Billion. Both Sensex and Nifty closed 0.3% lower for the week.

India's GDP growth touched 7.3% in Q2 (Sep '16) against 7.1% in Q1 (Jun '16). However, growth in Q3 (Dec '16) is likely to be hit by the demonetisation of high value bank notes.

Many automobile manufacturers (Maruti excepted) have reported lower sales in Nov '16. Demonetisation has hit the offtake of rural two-wheelers and used cars.

BSE Sensex index chart pattern

The following was the concluding comment in last week's post on the daily bar chart pattern of Sensex: "Some more consolidation or correction can't be ruled out." 

The index rallied past its falling 20 day EMA to touch an intra-day high of 26769 on Thu. Dec 1 - falling short of its 200 day EMA. Bears struck immediately. The index closed below its 20 day EMA - forming a 'reversal day' pattern (higher high, lower close).

On Fri. Dec 2, Sensex opened with a downward 'gap' and dropped below 26200, before closing slightly higher. The index may correct a bit more and test support from the zone between 25300 and 25900.

All four daily technical indicators have corrected oversold conditions but MACD, RSI and Slow stochastic are still in bearish zones. ROC climbed into positive territory, but has reversed direction.

Expect some more correction or consolidation - atleast till the US Fed increases interest rates. A worrying sign for bulls is that both DIIs and FIIs were net sellers of equity on Fri. Dec 2. If they join hands next week, the index can touch a new low. 

NSE Nifty index chart pattern

Oversold technical indicators led to the following comment in last week's post on the weekly bar chart pattern of Nifty: "A pullback rally towards 8300 is likely. Bears will probably use the opportunity to sell."

The index touched an intra-week high of 8251 but faced strong resistance from its sliding 50 week EMA. It dropped to close slightly lower for the week - forming a 'reversal week' bar (higher high, lower close) and an 'inverted hammer' candlestick pattern.

For the past four weeks, the index has closed within the 'support-resistance zone' between 8000 and 8300. A close below 8000 can trigger a fall towards 7500-7700.

Weekly technical indicators continue to look bearish. MACD has just entered negative territory. RSI has bounced up from the edge of its oversold zone. ROC and Slow stochastic are inside their oversold zones.

Some more correction or consolidation is likely. The index is trading below its 20 week and 50 week EMAs, but well above its 200 week EMA in a long-term bull market.

Bottomline? Sensex and Nifty charts show a struggle for domination between bulls and bears. Bears have the upper hand in the near term, but bulls are far from being vanquished. Stick to your asset allocation plans and invest your savings regularly, but try to avoid any bulk buying.