FIIs were net buyers of equity on Mon. Jul 1, but turned net sellers during the next four days. Their total net selling was worth Rs 5.9 Billion. DIIs were net sellers of equity on Mon., but net buyers during the next four days. Their total net buying was worth Rs 7.1 Billion, as per provisional figures.
India's Services PMI contracted for the first time since May '18, slipping to 49.6 in Jun '19 from 50.2 in May '19 due to stagnant sales and unfavourable taxation. (A number below 50 indicates contraction.) The Composite (Manufacturing + Services) PMI dropped to 50.8 in Jun '19 from 51.7 in May '19.
According to analysts, revenue mobilisation may be the single biggest impediment in the investment and consumption oriented budget tabled by the Finance Minister in Parliament on Fri. Jul 5. It will be difficult to meet the fiscal deficit target (3.3% of GDP).
BSE Sensex index chart pattern
A pre-budget rally in the stock market led to the formation of a bearish 'rising wedge' pattern on the daily bar chart of Sensex. The index crossed above the 40000 level for the first time since Jun 11 on budget day (Fri. Jul 5), but formed a 'reversal day' bar and dropped below the 'wedge'.
The index found support at its 20 day EMA - just like it did on the previous Fri. (Jun 28) - and gained ~119 points (0.3%) on a weekly closing basis. Sensex is trading well above the (blue) up trend line and its 200 day EMA in a bull market.
Daily technical indicators are looking neutral to bullish. MACD has merged with its falling signal line in bullish zone. ROC is above its 10 day MA in neutral zone. RSI is rising above its 50% level. Slow stochastic is poised to fall from its overbought zone - hinting at some more correction or consolidation.
The budget 'event risk' is out of the way. The next trigger for the stock market will be announcement of Q1 (Jun '19) results, which are not expected to be good. There may be a few positive surprises. That won't be enough to boost bullish sentiments.
Sensex may correct down to completely or partly fill the 'gap' formed on May 20 (marked GAP2 on chart). That will be an opportunity to add fundamentally strong but beaten down stocks. But try to avoid the temptation of buying 'cheap' small-caps.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty has closed above the upward 'gap' (formed on May 20) for the seventh week in a row. The index traded above the (blue) up trend line and its weekly EMAs in a long-term bull market - gaining 22 points (~0.2%) on a weekly closing basis.
Bears are not out of the game yet. Gains of the previous two weeks have been accompanied by falling volumes. Also, the index failed to sustain near the week's high and formed a 'shooting star' like candlestick pattern that has bearish implications.
Weekly technical indicators are looking neutral to bearish. MACD is about to cross below its signal line, and fall from its overbought zone. ROC is below its 10 week MA and is moving sideways in neutral zone. RSI is sliding down towards its 50% level. Slow stochastic is moving sideways with a downward bias in bullish zone. Some more consolidation or correction is possible.
Nifty's TTM P/E has moved up to 29.04, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is moving up in neutral zone after a sharp fall from its oversold zone. Some near-term index downside is likely.
Bottomline? Sensex and Nifty charts have been consolidating after touching lifetime highs. The pre-budget rally appears to have come to a halt. Continue with SIPs. Wait for Q1 (Jun '19) results to determine stock-specific actions.
S&P 500 index chart pattern
The following comments appeared in last week's post on the daily bar chart pattern of S&P 500: "The week's rally was accompanied by sliding volumes. A pullback towards the down trend line is a possibility."
The index touched an intra-day high of 2911 on Tue. Jun 11, but pulled back towards the (purple) down trend line, forming a 'reversal day' bar (higher high, lower close).
A sideways consolidation in a range of 20 points (2875 - 2895) followed. The index closed above its three EMAs in a bull market, and eked out a 0.5% weekly gain.
Daily technical indicators are in bullish zones, but not showing any upward momentum. MACD has crossed above its signal line to enter bullish zone. RSI is moving sideways above its 50% level. Slow stochastic is moving sideways inside its overbought zone.
Some more consolidation is possible before the index attempts to scale a new high.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market, but formed a 'doji' candlestick indicating indecision among bulls and bears. Weekly technical indicators are looking bullish to neutral. MACD is moving sideways below its signal line. RSI has moved above its 50% level after falling below it. Slow stochastic has moved up to its 50% level after falling below it.
FTSE 100 index chart pattern
The following comments appeared in last week's post on the daily bar chart pattern of FTSE 100: "Near-term index upside may be limited. Sliding volumes during last week's rally can encourage bears to 'sell on rise'."
The index touched an intra-day high of 7421 and closed just below 7400 on Tue. Jun 11 - negating the bearish 'head and shoulders' pattern (refer last week's post). Bulls failed to press home their advantage, and bears stepped in to sell as expected.
The index received support from its 20 day EMA, and closed above its three EMAs in bull territory. Strong volumes on the two down days indicate bears are in no mood to give up without a fight.
Daily technical indicators are in bullish zones but showing downward momentum. MACD crossed above its signal line to enter bullish zone, but is turning down. RSI is falling towards its 50% level. Stochastic has slipped down from its overbought zone.
A fall and a test of support from the 200 day EMA may be on the cards.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in long-term bull territory, but formed a 'shooting star' candlestick pattern that can trigger some correction or consolidation . Weekly technical indicators are in bullish zones, but not showing any upward momentum.
FIIs were net buyers of equity on Tue. (Jan 15), but net sellers on Mon. & Wed. (Jan 14 & 16). Their total net selling was worth Rs 6.6 Billion. DIIs were net buyers on all three trading days. Their total net buying was worth Rs 12.5 Billion, as per provisional figures.
India's wholesale and retail inflation eased further in Dec '18 on the back of cooling food and fuel prices. CPI-based inflation slipped to an 18 months low of 2.19% from 2.33% in Nov '18 and 5.21% in Dec '17. WPI-based inflation was at an 8 months low of 3.8% against 4.64% in Nov '18 and 3.58% in Dec '17.
A vicious battle for supremacy is raging on the daily bar chart pattern of Nifty, with no quarter given and none asked.
On Mon. Jan 14, the index dropped below the 'diamond' pattern - within which it has been trading since the beginning of Nov '18 - and even slipped below its 200 day EMA into bear territory intra-day.
Just when it looked like bears were going to dominate, bulls bought the intra-day dip and ensured that the index closed just within the 'diamond'. On Tue. Jan 15, the index broke out and closed above the 'diamond' pattern on the back of combined FII and DII buying.
However, the breakout has not been a convincing one. Volumes (not shown) were not significantly higher to technically confirm the upward breakout. Today's lacklustre trading and formation of a small 'shooting star' candlestick pattern is an indication that bulls were unable to drive home their advantage.
Nifty is trading above its three EMAs in bull territory. A convincing index close above the previous (Dec 19th) top of 10985 is necessary if bulls are to regain control of the chart.
Daily technical indicators are in bullish zones, but not showing much upward momentum. MACD is moving sideways after merging with its signal line. RSI is above its 50% level. Slow stochastic is rising towards its overbought zone.
Nifty's TTM P/E has moved up to 26.17 - which is much higher than its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone - hinting at some near-term consolidation.
Q3 (Dec '18) results declared so far have been a mixed bag. Upcoming results of Reliance, HUL, ITC can give some impetus to bulls.
But oil's price is inching up and the Rupee is slipping against the US Dollar. So, the probability of a sustained bull rally appears low.
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S&P 500 index chart pattern
The following remark in last week's post on the daily bar chart pattern of S&P 500 may be worth noting: "A convincing move (i.e. accompanied by strong volume support) above the 'gap' is required for the index to rise to new highs."
The downward 'gap' (formed on Jan 30) was completely filled on Mon. Aug 6. The next day, the index opened with an upward 'gap' to touch a high of 2863 - just 10 points short of the lifetime high of Jan 26 - but lacked strong volume support.
Bears used the opportunity to stall the rally. On Fri. Aug 10, the index opened with a downward 'gap' and dropped to seek support from its 20 day EMA before closing with a weekly loss of 7 points.
Daily technical indicators have corrected overbought conditions, and are showing downward momentum. MACD is about to cross below its signal line. RSI is falling towards its neutral zone. Slow stochastic has dropped from its overbought zone. All three showed negative divergences by failing to rise higher with the index.
Some more correction or consolidation is likely. Expect the support/resistance zone between 2780 and 2800 to provide good support on the downside. In case the index corrects further, the upper edge of the large 'symmetrical triangle' should provide stronger support.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market, but formed a 'shooting star' candlestick that can trigger a correction. Weekly MACD and RSI are in bullish zones but not showing any upward momentum. Slow stochastic has started to correct inside its overbought zone.
FTSE 100 index chart pattern
After touching a lifetime high of 7903.50 on May 22 '18, the daily bar chart pattern of FTSE 100 has been consolidating sideways and straddling its 20 day and 50 day EMAs. The index is trading above its gradually rising 200 day EMA in a bull market.
Bears are selling on every rise, while bulls are buying the dips. For the past two months, the index has formed a bullish pattern of 'higher bottoms and higher tops' - possibly in anticipation of a favourable BrExit deal with the EU.
Daily technical indicators continue to look neutral to bearish. MACD and RSI are in neutral zones and showing slight downward momentum. Stochastic is falling towards its 50% level.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly MACD has crossed below its signal line in bullish zone. RSI is falling in bullish zone. Slow stochastic is falling below its 50% level.
WTI Crude Oil chart
The following remarks were made in the previous post on the daily bar chart pattern of WTI Crude Oil: "Daily technical indicators are looking overbought and showing upward momentum. Some more upside is possible. However, a correction or consolidation may be around the corner."
A sharp high-volume correction dropped oil's price below the 68 level intra-day on May 8, but bulls 'bought the dip'. Oil's price recovered the very next day, and rallied past the 72 level to a new 3 year high on May 21.
Daily technical indicators are looking overbought and showing negative divergences by failing to touch new highs with oil's price. Falling volumes during the last leg of the rally is also a bearish sign.
Oil's price is trading well above its three rising EMAs in a bull market. But some correction or consolidation may be on the cards.
On longer term weekly chart (not shown), oil's price closed well above its three rising weekly EMAs. The 50 week EMA has crossed above the 200 week EMA. The 'golden cross' has technically confirmed a return to a long-term bull market. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with oil's price.
Brent Crude Oil chart
The daily bar chart pattern of Brent Crude Oil suffered a day's high-volume correction down to the 73 level on May 8, but bounced up after receiving good support from its rising 20 day EMA.
The rally continued. Oil's price crossed above 80 for the first time in more than 3 years on May 17, but closed lower near its opening level - forming a 'shooting star' candlestick pattern that often marks an intermediate top.
Oil's price is trading well above its three rising EMAs in a bull market. Daily technical indicators are correcting overbought conditions. Some correction or consolidation may follow.
On longer term weekly chart (not shown), oil's price closed well above its three weekly EMAs in long-term bull territory. The 'golden cross' of the 50 week EMA above the 200 week EMA has technically confirmed a return to a long-term bull market. Weekly technical indicators are looking overbought. RSI and Slow stochastic are showing negative divergences by failing to touch new highs with oil's price.
FIIs were net sellers of equity on four of the five trading days. Their total net selling during the week was worth Rs 15 Billion. DIIs were net buyers of equity on all five trading days. Their net buying was worth Rs 20.3 Billion, as per provisional figures.
Sensex and Nifty both lost 1.9% on a weekly closing basis. What can be more worrisome for bulls is that both indices closed below the downward 'gaps' formed on Feb 5.
India's import bill could bloat by $25-50 billion in the current financial year due to spike in crude oil prices, but the government sees no reason for panic. However, a report by Goldman Sachs says that India's Current Account Deficit (CAD) may increase to 2.4% of GDP in FY 2018-19.
BSE Sensex index chart pattern
Negative divergences visible last week on overbought technical indicators on the daily bar chart pattern of Sensex had hinted at a likely corrective move.
A hung Karnataka assembly provided bears with just the trigger they were looking for. The index touched an intra-day high of 35994 on Tue. May 15 - its highest level in more than 3 months - as initial results showed a BJP majority.
However, as the day progressed and more results came in, it became clear that BJP will fall short of a simple majority. Profit booking ensued. The index dropped to close near its opening level - forming a 'shooting star' candlestick pattern that often marks an intermediate top.
Bears went on the warpath. The index corrected for three straight sessions, falling below its 20 day EMA and closing just below the downward 'gap' formed on Feb 5.
The index touched an intra-day low of 34822 on Fri. May 18, falling below its previous (May 4) low of 34848 which can lead to further downside. However, by closing exactly at 34848, the index has kept open the possibility of a technical bounce.
Daily technical indicators are looking bearish and showing downward momentum. MACD has crossed below its signal line in bullish zone. ROC has dropped below its 10 day MA to its neutral zone. RSI has also dropped to its neutral zone. Slow stochastic is falling below its 50% level.
Resignation of Karnataka's BJP CM before the floor test on Sat. May 19 - as he failed to engineer defections from the opposition Congress and JD(S) - will give bears added incentive to sell.
Small investors need not be in a rush to 'buy the dip'. As mentioned in several previous posts, filling of the Feb 5 downward 'gap' was expected to be followed by a resumption of the corrective down move from the Jan 29 top.
The 'support-resistance zone' between 32500 and 33800 can come back into play. Note that the rising 200 day EMA is in the middle of the 'support-resistance zone' and is likely to provide strong support should the index fall that far.
NSE Nifty index chart pattern
Small investors were advised caution in last week's post on the weekly bar chart pattern of Nifty because of fundamental and technical headwinds. The index touched a 3 months high of 10929 but closed at a 3 weeks low of 10596 - forming a 'reversal' bar (higher high, lower close) with good volume support that can lead to further correction.
The previous 3 weeks' trading has formed a bearish 'broadening top' pattern (higher high, lower low) from which a downward breakout is likely.
Weekly technical indicators are in bullish zones, but their upward momentum have stalled. The index is trading above its two rising weekly EMAs - so the bullish structure of the chart is intact.
Nifty's TTM P/E has decreased to 26.27 - which is still much above its long-term average. The breadth indicator NSE TRIN (not shown) has risen sharply to enter its oversold zone, and can limit near-term index downside.
Bottomline? Counter-trend rallies on Sensex and Nifty appear to have ended. Some more correction or consolidation will help improve the technical 'health' of both charts. Don't rush to 'buy the dip'. Better entry points may become available with a bit of patience.
FIIs were net buyers of equity on Mon. May 14, but net sellers on the next two days. Their total net selling was worth Rs 5 Billion. DIIs were net buyers of equity on all three days this week. Their total net buying was worth Rs 14.5 Billion, as per provisional figures.
Inflation is inching up again. India's CPI inflation in Apr '18 moved up to 4.58% from 4.28% in Mar '18. Core inflation - comprising non-food and non-fuel components - hit a 34 months high of 6%.
India's WPI inflation touched a 4 months high of 3.18% in Apr '18 against 2.47% in Mar '18 due to higher fuel and vegetable prices. Any further rise may force RBI's hand in increasing interest rates.
The following comments were made in last week's update on the daily bar chart pattern of Nifty: "The interesting pattern to observe is that the index has failed to close above the trend line despite intra-day upward breaches on Mon. & Tue. (May 7 & 8). That may encourage bears to mount a stronger attack if the index tries to move up further."
The index did move up further to touch an intra-day high of 10929 on Tue. May 15, but closed more than 125 points lower on profit booking to form a 'shooting star' candlestick pattern that often marks an intermediate top.
Note that the index failed to close above the (purple) up trend line even for a single day after falling below it on May 4. Bears used the hung Karnataka assembly as an excuse to mount a strong attack today.
Bulls gave up ground reluctantly. The index slipped below the downward 'gap' (formed on Feb 5) intra-day, but recovered to close just above it - forming a 'long-legged doji' candlestick pattern that indicates indecision among bulls and bears.
Daily technical indicators have started correcting. MACD is just below its overbought zone and is about to cross below its signal line. RSI has started to fall after facing resistance from the edge of its overbought zone. Slow stochastic has dropped from its overbought zone.
Though Nifty is trading above its three rising EMAs in a bull market, some more correction can't be ruled out. The May 4 low of 10602 can be maintained as a stop-loss by those holding long positions.
Nifty's TTM P/E is at 26.66 - which is much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is rising towards its oversold zone, and can limit index down side.
The breach of a steep up trend line does not mean that the trend has changed. However, today's fall away from the trend line is a warning for bulls to close long positions. A fall below 10602 can lead to a deeper correction.
S&P 500 index chart pattern
The following comments appeared in last week's post on the daily bar chart pattern of S&P 500: "The first and most critical task for bulls will be to cover/fill 'GAP 3' and 'GAP 2'. Even if both 'gaps' are filled the index can be expected to resume its correction."
Bulls did manage to completely fill 'Gap 3' during last week's trading, but faced resistance from the 2710 level. Bears decided to 'sell on rise'. The index dropped below its 20 day and 50 day EMAs to touch an intra-day low of 2660 on Fri. Apr 20, before closing 10 points higher at its 20 day EMA.
The index appears to have formed a bearish 'rising wedge' pattern (labelled 'Rising Wedge 2'), from which the likely break out is downwards. Strong volumes on Thu. & Fri. are hinting at such a downward break out.
Note that the index had earlier formed 'Rising Wedge 1' during Feb-Mar '18 from which it broke out downwards with a 'gap' (labelled 'Gap 2) on Mar 19. Filling 'Gap 2' should be the next upward target for bulls.
Daily technical indicators are starting to turn bearish. MACD is above its signal line, but facing resistance from its '0' line in neutral zone. RSI has slipped below its 50% level in neutral zone. Slow stochastic is poised to drop from its overbought zone, and can trigger a break out below 'Rising Wedge 2'.
The index is trading above its 200 day EMA in bull territory. However, bears will retain the upper hand as long as the index trades below 'Gap 1'.
On longer term weekly chart (not shown), the index formed a 'shooting star' candlestick and closed at its 20 week EMA but above its 50 week and 200 week EMAs in a long-term bull market. Weekly MACD is falling below its signal line in bullish zone. RSI is in neutral zone. Slow stochastic has bounced up from the edge of its oversold zone but remains bearish.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 corrected to close just below 7200 and the 50 day EMA on Mon. Apr 16. The next day, it touched a lower intra-day low of 7190 but closed higher at 7226.
The 'reversal day' bar (lower low, higher close) triggered a smart rally past 7300 and the sliding 200 day EMA into bull territory. The index closed at 7368 on Fri. Apr 20, with a 1.4% weekly gain.
Daily technical indicators are looking bullish and a bit overbought. MACD is rising above its signal line in bullish zone. RSI is rising towards its overbought zone. Slow stochastic is forming a 'double top' reversal pattern inside its overbought zone, and can trigger some correction/consolidation.
The next overhead resistance can come from the long-term 'support/resistance' level at 7440. (At the time of writing this post, the index has slipped a bit but remains above its three EMAs in bull territory.)
FTSE is in the process of correcting its entire fall of 916 points from its Jan 12 top to its Mar 23 low. By touching 7368 on Fri. Apr 20, the index has retraced a little more than 50% of its fall.
The next upward target is the Fibonacci 61.8% retracement level of 7443 - which is almost identical to the long-term 'support/resistance' level of 7440. This is one of those interesting coincidences that often occur on technical charts.
On longer term weekly chart (not shown), the index closed above its merged 20 week and 50 week EMAs, and well above its 200 week EMA in a long-term bull market. Weekly technical indicators have corrected oversold conditions. MACD and RSI remain in bearish zones. Slow stochastic is in neutral zone.
FIIs and DIIs were both net sellers of equity in the week gone by. FII net selling was worth Rs 6.1 Billion. DII net selling was worth Rs 6 Billion.
Incidentally, FIIs were net buyers on Tue. & Thu. while DIIs were net buyers on Mon. & Fri. Sensex and Nifty gained 0.6% on a weekly closing basis while consolidating sideways within bullish 'flag' patterns.
India's WPI inflation rose to an 8 months high of 3.93% in Nov '17, against 3.59% in Oct '17 and 1.82% in Nov '16 - on the back of higher food and oil prices.
Exports were up 30.6% while imports were up 19.6% YoY in Nov '17. Exports were worth $ 26.2 Billion against imports of $ 40 Billion - leaving a trade deficit of $ 13.8 Billion (higher than $ 13.4 Billion in Nov '16 but lower than $ 14 Billion in Oct '17).
BSE Sensex index chart pattern
Note the following remarks in last week's post on the daily bar chart pattern of Sensex: "The index needs to cross convincingly above its previous (Nov 28) top of 33770 for bulls to wrest control. Bears may try to prevent that from happening - at least till Gujarat state election results are announced."
Exit polls on Thu. Dec 14 predicted comfortable victories for NDA in Gujarat and Himachal Pradesh state elections. Bulls celebrated. The index formed an upward 'gap' on Fri., but stopped short of the upper edge of the 'flag' pattern and the Nov 28 top of 33770.
It seems bulls and bears were uncertain about the actual election results (to be announced on Mon. Dec 18). That uncertainty was reflected in the formation of a 'shooting star' candlestick pattern on Fri. Dec 15.
Daily technical indicators are looking bullish, even though RSI is still in bearish zone. ROC is showing strong upward momentum, the others are not.
The index is trading above its three EMAs in a bull market. An upward breakout above the 'flag' pattern appears inevitable. Whether the breakout will be followed by a pullback to the top of the 'flag' or not may depend on the margin of NDA's victory in the two states.
Remember that to be technically valid, any upward breakout should be accompanied by a significant increase in volumes.
NSE Nifty index chart pattern
For the past 6 weeks, the weekly bar chart pattern of Nifty has been consolidating within a 'flag' pattern, from which an upward breakout is likely.
Despite exit poll predictions of comfortable NDA victories in recently concluded Gujarat and Himachal state elections, the index failed to breakout above the 'flag' last week.
Weekly technical indicators are in bullish zones. Only RSI is showing some upward momentum. MACD, RSI and Slow stochastic are showing downward momentum.
Nifty's TTM P/E has increased to 26.46 - well above its long-term average. A few experts on business TV channels have been proffering clever arguments to justify the high index valuation. Ignore them. Once election results are out of the way, market focus will shift to continued meagre earnings of India Inc.
The breadth indicator NSE TRIN (not shown) has fallen sharply in neutral zone and is hinting at some more index upside. With FIIs in selling mood, don't expect a runaway rally.
Bottomline? Sensex and Nifty charts have been consolidating within bullish 'flag' patterns for the past 6 weeks. Upward breakouts from 'flag' patterns are likely. Breakouts - and any subsequent pullbacks - can be used to add to existing holdings.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 didn't stay below the (purple) down trend line for very long. On Tue. Nov 21, the index crossed above the trend line with an upward 'gap' that forced bears to retreat once again.
On Fri. Nov 24, the index touched an intra-day high of 2604, and closed above the 2600 level for the first time - gaining 0.9% on a weekly closing basis.
Daily technical indicators are looking bullish. MACD is about to cross above its signal line and re-enter its overbought zone. RSI has bounced up after receiving support from its 50% level, and is moving up towards its overbought zone. Slow stochastic has entered its overbought zone.
Note that all three indicators are showing negative divergences by failing to touch new highs with the index. A pullback towards the down trend line is a possibility.
The index is trading above its three rising EMAs in a bull market, and is climbing a wall of technical worries. That is what bull markets do.
Profit booking often ensues when an index touches a new high. So, remain circumspect, maintain a trailing stop-loss and enjoy the bull ride.
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 overbought and can trigger a correction.
FTSE 100 index chart pattern
The following comment was made in last week's post on the daily bar chart pattern of FTSE 100: "..an oversold Slow stochastic can also trigger a pullback towards the (purple) down trend line."
The index bounced up after receiving support from the 7350 level on Mon. Nov 20. On Wed. Nov 22, the index climbed above its falling 20 day and 50 day EMAs, the (purple) down trend line and the 7460 level intra-day, but faced selling pressure and closed below 7420.
A bearish 'shooting star' candlestick pattern got formed. It triggered a sideways consolidation with a downward bias. The index eked out a 0.4% gain on a weekly closing basis, and remained in bull territory above its 200 day EMA.
Daily technical indicators are looking bearish, and showing slight downward momentum. The (purple) down trend line continues to dominate the chart - as it has done for almost 6 months.
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 sliding below its signal line in bullish zone. RSI and Slow stochastic are seeking support from their respective 50% levels.
S&P 500 index chart pattern
The following comment was made in last week's post on the daily bar chart pattern of S&P 500: "Some consolidation around current levels and a pullback towards 2400 are possibilities."
In a holiday-shortened trading week, the index consolidated sideways on Tue. and Wed. (May 30 & 31), dropping to a low of 2403 on Wed. with a volume surge before bouncing up to close just a point lower than Tuesday's close of 2413.
The index rose to touch a new high of 2440 on Fri. Jun 2, but closed a point lower - gaining almost 1% on a weekly closing basis.
All three EMAs are rising, and the index is trading above them in a bull market. However, daily technical indicators are looking overbought. Also, the previous two days' rally was supported by sliding volumes.
Some consolidation, and a correction towards 2420 are possibilities.
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 and showing negative divergences by failing to touch new highs with the index.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 touched a new high of 7599 on Fri. Jun 2, but closed at 7548 - just 4 points higher than the day's opening level, and absolutely flat for the week.
A 'shooting star' candlestick pattern, which often marks the end of an intermediate up move, was formed by Friday's trade.
Daily technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index.
Slow stochastic has started to fall after forming a 'double top' reversal pattern inside its overbought zone - giving an early warning of a correction.
The index continued to trade within a bearish 'rising wedge' pattern. A downward breakout from the pattern - towards the rising 20 day EMA - is likely.
On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market, but formed a 'long-legged doji' candlestick pattern that often indicates a change of trend. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.
During the week, FIIs were net sellers of equity worth Rs 9.9 Billion while DIIs were net buyers of equity worth Rs 13.9 billion. Interestingly, during the first two days of the week, FIIs were net buyers and DIIs were net sellers.
Sensex closed about 0.9% higher, and Nifty closed about 0.3% higher on a weekly closing basis. Both indices touched new highs during the week.
Different slabs of GST rates have been finalised at a recent meeting of state Finance Ministers in Srinagar, and implementation from July 1 seems on the cards. However, the feisty West Bengal CM is trying to put a spanner in the works by claiming that small businesses are not yet ready to implement GST.
BSE Sensex index chart pattern
The following remark was made in last week's post on the daily bar chart pattern of Sensex: "... the bullish structure is looking a bit shaky as any downward breach of 'fan line 3' can bring bears to the fore."
The index rose to touch a new high of 30712 on Fri. May 19, only to drop lower and seek support from 'fan line 3' before bouncing up.
Bulls may heave a sigh of relief that 'fan line 3' was not breached. But if FIIs remain in selling mode, that support may get breached soon.
All three EMAs are rising, and the index is trading above them in a bull market. However, Q4 (Mar '17) results show that corporate earnings are lagging behind index valuation.
Technical indicators are in bullish zones, but giving conflicting signals. MACD is moving sideways. ROC and RSI have reversed their downward slide. Slow stochastic is about to drop from its overbought zone.
All four are showing negative divergences by failing to touch new highs with the index. Expect some consolidation or correction.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty touched a new high of 9533 but could not sustain above the 9500 level.
The index closed just below its opening level of the week (9434) to form a 'shooting star' candlestick pattern that often marks the end of an intermediate up move. (Note a similar pattern that formed in the week ending on Sep 9 '16.)
The index is trading well above its two weekly EMAs in a bull market. Weekly technical indicators are inside their respective overbought zones. Three of them - ROC, RSI, Slow stochastic - are showing negative divergences by failing to touch new highs with the index.
Nifty's TTM P/E is at 24.91 - much above its long-term average. The breadth indicator NSE TRIN (not shown) is falling deeper inside its overbought zone.
A correction towards the Mar '15 top of 9119 will improve the technical 'health' of Nifty's chart and provide a good adding opportunity. But hoping for a correction never caused one. It'll happen when it is least expected.
Bottomline? Sensex and Nifty charts continue to touch new highs. Both indices are looking overbought. Corporate earnings are far from catching up with market expectations. If FIIs and DIIs keep trading at cross purposes, upside for both indices will remain capped. Stay invested but maintain trailing stop-losses.
