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Monday, December 29, 2014

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Dec 26, ‘14

S&P 500 Index Chart

SPX_Dec2614

In a truncated trading week due to Christmas holiday, volumes were expectedly low. That did not prevent the daily bar chart pattern of S&P 500 to rise to new intra-day and closing highs. All three EMAs are rising and the index is trading above them in a long-term bull market.

The index is coming close to testing resistance from the upward-sloping line of the bearish ‘broadening top’ pattern. A convincing move above the pattern will allow bulls to regain total control.

However, bears may use the opportunity to initiate another sharp correction. Note that two of the three daily indicators – MACD and RSI – failed to touch new highs with the index. The negative divergences is a warning sign for bulls.

On longer term weekly chart (not shown), the index is trading well above its three weekly EMAs in a long-term bull market. But all three weekly technical indicators are showing negative divergences by failing to touch new highs with the index. Brace yourself for a roller-coaster ride.

FTSE 100 Index Chart

FTSE_Dec2614

In a holiday-shortened trading week, the daily bar chart pattern of FTSE 100 crossed above its 50 day EMA and the 6600 level, but faced strong resistance from its 200 day EMA. Failure to re-enter bull territory may encourage bears to mount another attack.

Daily technical indicators have corrected oversold conditions, but haven’t quite turned bullish yet. MACD is rising above its signal line in negative territory. RSI is moving up towards its 50% level, but its upward momentum is slowing down. Slow stochastic is looking bullish by rising sharply above its 50% level.

Can the index return to bull territory in a convincing manner and show some gains for the year? Bears will try their best not to let that happen.

On longer term weekly chart (not shown), the index is trading well above its 200 week EMA in a long-term bull market, but faced strong resistance from its entangled 20 week and 50 week EMAs. Weekly technical indicators are looking bearish.

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