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Monday, July 27, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Jul 24, 2015

S&P 500 Index Chart

S&P 500_Jul2415

The daily bar chart pattern of S&P 500 rallied past its Jun 22 top of 2130 to touch an intra-day high of 2133 on Jul 20, but fell just short of its lifetime high of 2135 (touched on May 20 ‘15).

Bears mounted a strong attack. The index crashed below its 20 day and 50 day EMAs and closed just below the 2080 level. Though the index is trading above its rising 200 day EMA in a bull market, last week’s strong down-day volumes is a sign of distribution.

The level to watch is the Jul 7 low of 2044. A convincing drop below may lead to a test of the Feb 2 low of 1981.

Daily technical indicators are turning bearish. MACD has dropped from its overbought zone. So has Slow stochastic. RSI has crossed below its 50% level. All three indicators are showing strong downward momentum, hinting at a continuation of the corrective move.

On longer term weekly chart (not shown), the index dropped below its 20 week EMA but is trading above its rising 50 week and 200 week EMAs in a long- term bull market. However, the 20 week EMA may be forming a bearish ‘rounding top’ pattern.

Weekly technical indicators are giving mixed signals. MACD is falling below its signal line in positive zone. RSI has slipped below its 50% level. Slow stochastic has crossed above its 50% level. Strong volumes on down weeks is a sign of distribution. Caution is advised.

FTSE 100 Index Chart

FTSE_Jul2415

The daily bar chart pattern of FTSE 100 had a brief sojourn in bull territory by closing above all three EMAs on Jul 16 and Jul 20. But the index failed to close above the support-resistance level of 6800.

Bears got encouraged to mount a vicious attack that sent the index plunging below all three EMAs and the 6600 level into bear territory. Good volumes (not shown on chart) during last week’s fall mean bears are in no mood to relent. A test of the Jul ‘15 low of 6430 is on the cards.

Daily technical indicators are looking bearish. MACD is falling towards its rising signal line inside negative zone. RSI has dropped below its 50% level. Slow stochastic is about to cross below its 50% level.

The bearish pattern of ‘lower tops and lower bottoms’ from the lifetime high of 7123 (touched on Apr 27 ‘15) continues.

On longer term weekly chart (not shown), the index dropped sharply below its 20 week and 50 week EMAs but closed above its 200 week EMA, and technically remains in a long-term bull market. Weekly technical indicators are in bearish zones.

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