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Monday, May 11, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – May 08, 2015

S&P 500 Index Chart

S&P 500_May0815

The daily bar chart pattern of S&P 500 was in volatile mood last week. It rose to touch an intra-day high of 2121 on Mon. May 4 – falling short of its lifetime high of 2126 touched on Apr 27 – only to drop more than 50 points below its 20 day and 50 day EMAs on Wed. May 6.

By Fri. May 8, the index recovered all its losses during the week to close at 2116, with a marginal weekly gain of 8 points. Note that volumes during the two down-days (Tue. & Wed.) were higher than volumes on the three up-days.

The same story had played out a week ago. Volumes during the three down-days (Mon., Wed., Thu.) were higher than volumes on the two up-days. This is a sign of ‘distribution’ – from stronger to weaker hands.

Daily technical indicators are in bullish zones. MACD has moved up to touch its sliding signal line. RSI is oscillating about its 50% level without showing any clear direction. Slow stochastic has moved up sharply above its 50% level after dropping below it.

All three EMAs are rising, and the index is trading above them. But lower volumes on up-days raises serious concerns about the sustainability of the long-term bull market.

On longer term weekly chart (not shown), the index received good support from its rising 20 week EMA, and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but not showing much upward momentum.

FTSE 100 Index Chart

FTSE_May0815

During a holiday-shortened trading week, the daily bar chart pattern of FTSE 100 touched an intra-day high of 7053 on Tue. May 5 but closed 126 points lower. By Thu. May 7, the index dropped another 117 points to an intra-day low of 6810, but recovered all its losses to close at 7047 by Fri. May 8 with a sharp spike in volumes – gaining about 60 points for the week.

Daily technical indicators are in bullish zones. MACD bounced up from its ‘0’ line, but is below its falling signal line. RSI has crossed above its 50% level. Slow stochastic has climbed sharply from its oversold zone.

All three EMAs are rising, and the index is trading above them in a long-term bull market. But bears appear to be quite active – using every rise to sell. Stay invested, but remain cautious.

On longer term weekly chart (not shown), the index dropped below its rising 20 week EMA, but is trading above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but not showing any upward momentum.

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