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Monday, March 6, 2017

S&P 500 and FTSE 100 charts (Mar 03 '17): correcting after touching new lifetime highs

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 shows that bulls are in a rampaging mood. The index consolidated sideways in a narrow 12 points range during the first two days of the week (last two days of Feb '17).

On Mar 1, the index opened with a big upward 'gap' and strong volume support. It rose to touch a new lifetime intra-day high of 2401 before correcting a bit to 2396 - a new lifetime closing high.

During the next two days, the index corrected a bit more but managed to close above 2380 on both days and partly filled the 'gap' of Mar 1.

Daily technical indicators are inside their overbought zones, but are in the process of correcting overbought conditions.

The US Fed has hinted at a hike in interest rates during Mar '17. That should strengthen the US Dollar and propel the index even higher.

The index is trading well above its three rising EMAs in a bull market. A correction is overdue and will improve the technical 'health' of the chart. But a correction doesn't happen by wishing for it.

As long as bulls are making merry, just maintain a trailing stop-loss and enjoy the ride.

On longer term weekly chart (not shown), the index closed at a new lifetime high and is trading well above its three rising weekly EMAs in a long-term bull market. All three weekly technical indicators are looking quite overbought. 

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 had been consolidating sideways within a 'symmetrical triangle' pattern after touching a high of 7354 on Jan 16 '17.

On Wed. Mar 1, the index broke out upwards from the 'triangle' with a volume surge and touched a new lifetime high of 7383. 

The next day, it rose even higher to touch a new lifetime high of 7395, but closed just below its opening level of 7383 to form a 'doji' candlestick pattern (which indicates hesitation among bulls and bears).

On the last day of the week, the index dropped to test support from its Jan 16 top but bounced up to close at 7374 - gaining 1.8% on a weekly closing basis.

The formation of a 'doji', followed by a lower close may trigger a pullback towards the top of the 'symmetrical triangle'. The likely dip can be used to buy.

Daily technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index. Some correction or consolidation is likely.

On longer term weekly chart (not shown), the index has closed at a new lifetime high and is trading well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought and showing negative divergences.

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