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Monday, April 14, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 11, ‘14

S&P 500 Index Chart

$SPX-001-001

Several bearish signals led to the following concluding comments in last week’s analysis of the daily bar chart pattern of S&P 500: “Maintain a stop-loss at 1840 to protect profits. A drop below 1840 would confirm an intermediate top at 1897. A deeper correction may follow.”

After bouncing up from the 1840 level in the early part of last week, the index succumbed to selling pressure and dropped sharply below its 20 day and 50 day EMAs and the 1840 level. The index is just above a support zone between 1800-1810. Buying interest may emerge here.

Daily technical indicators are looking bearish. MACD has slipped into negative territory below its falling signal line. RSI has dropped below its 50% level. Slow stochastic is about to enter its oversold zone.

The index is trading more than 50 points above its rising 200 day EMA. There is no immediate threat to the long-term bull market.

FTSE 100 Index Chart

FTSE_Apr1114

The 6 months daily bar chart pattern of FTSE 100 forayed into bull territory briefly – only to face strong volume of selling by bears, and ended the week below the 6600 level and all three EMAs. The only good news for the bulls is that the stop-loss level of 6500 didn’t get breached.

Daily technical indicators are looking bearish. MACD is negative, and about to cross below its signal line. RSI is falling below its 50% level. Slow stochastic is about to drop below its 50% level.

The 6500 level may be tested soon.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 are facing sharp corrections. Both indices are near support levels, but deeper corrections can not be ruled out. Wait for the corrections to play out before considering re-entry.

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