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Monday, May 12, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – May 09, ‘14

S&P 500 Index Chart

S&P 500_May0914

The 6 months daily bar chart pattern of S&P 500 has resumed its up move after a sharp bull market correction from the Apr 4 peak of 1897. The index is receiving good support from its rising 50 day EMA. At the time of writing this post, the index has moved up within handshaking distance of its lifetime high touched on Apr 4.

Daily technical indicators are looking bullish. MACD has crossed above its signal line in positive territory. RSI is rising above its 50% level. Slow stochastic is moving up towards its overbought zone. The index appears to have taken the latest round of QE3 tapering in stride.

The previous top of 1897 needs to be crossed convincingly for bulls to regain complete control. Caution is advised as the index approaches its previous top – just in case it forms a ‘double-top’ reversal pattern. Stay invested with a stop-loss at 1850.

On longer term weekly chart (not shown), all three weekly EMAs are rising and the index is trading above them. That is the sign of a bull market. However, weekly technical indicators are showing some weakness by touching lower tops.

FTSE 100 Index Chart

FTSE_May0914

The 6 months daily bar chart pattern of FTSE 100 is back in bull territory after a corrective spell that lasted about 2 months. The index is consolidating between 6800 and 6850. A convincing move above the Feb ‘14 top of 6866 is required for bulls to assume total control of the chart.

Daily technical indicators are looking overbought. MACD is above its signal line and has reached the edge of its overbought zone. RSI and Slow stochastic are both inside their respective overbought zones.

Some more consolidation will help the index to move higher. On longer term weekly chart (not shown), the index may be forming a large ascending triangle pattern from which the likely upward break out can take the index past the 7500 mark.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 are in long-term bull markets, and poised to touch new highs. Caution is advised as both indices are near previous tops. Stay invested, with suitable stop-losses.

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