Monday, July 25, 2016

S&P 500 and FTSE 100 charts (Jul 22 '16): consolidating after sharp rallies

S&P 500 index chart


Negative divergences and overbought conditions of technical indicators in last week's post on the daily bar chart pattern of S&P 500 had hinted at a pause in the bull rally.

The index consolidated within a narrow range last week - touching a low of 2159 on Tue. July 19 and a new high of 2176 the following day - gaining just 8 points on a weekly closing basis.

All three EMAs are rising, and the index is trading well above them in a bull market. MACD and Slow stochastic moved sideways inside their overbought zones. RSI did likewise, just below its overbought zone.

Some more consolidation - or a correction - is likely. Booking part profits may be a good idea. 

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market for the 20th week in a row. Weekly technical indicators are looking overbought.

FTSE 100 index chart


The daily bar chart pattern of FTSE 100 consolidated sideways during the week, but closed with a weekly gain of about 1%. 

All three EMAs are rising, and the index is trading above them in a bull market. However, the rally from the Jun '16 low has been a bit too steep. A correction or some more consolidation will improve the technical 'health' of the chart.

All three daily technical indicator moved sideways with the index - MACD and Slow stochastic remained well inside their respective overbought zones; RSI was just below its overbought zone. 

On longer term weekly chart (not shown), the index closed more than 400 points above its three weekly EMAs in a long-term bull market for the 4th week in a row. All three EMAs are converging, which usually precedes a sharp move. Weekly technical indicators are looking quite overbought and hinting at a correction or consolidation.

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