Amazon deals

Monday, June 12, 2017

S&P 500 and FTSE 100 charts (Jun 09 '17): bears flex their muscles

S&P 500 index chart pattern


The following remark appeared in last week's post on the daily bar chart pattern of S&P 500: "Some consolidation, and a correction towards 2420 are possibilities."

The index consolidated within a 15 points range (2425-2440) during the first four days of the trading week. 

On Fri. Jun 9, the index touched a new high of 2446, dropped below 2420 to seek support from its rising 20 day EMA, only to bounce up and close at 2432 - losing 7 points on a weekly closing basis.

Friday's trading formed a 'spinning top' candlestick pattern which indicates indecision among bulls and bears. When formed at an index top, it has the potential to reverse the up trend.

Daily technical indicators are in bullish zones, but not showing any upward momentum. All three are showing negative divergences by failing to touch new highs with the index.

The index is trading above its three rising EMAs in a bull market. Bulls are using dips to buy. Some more consolidation and/or correction can't be ruled out. Stay invested, but maintain a trailing stop-loss.

On longer term weekly chart (not shown), the index formed a 'reversal week' bar (higher high, lower close) accompanied by strong volumes, but closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern


The following remarks appeared in last week's post on the daily bar chart pattern of FTSE 100: "The index continued to trade within a bearish 'rising wedge' pattern. A downward breakout from the pattern - towards the rising 20 day EMA - is likely."

On Mon. Jun 5, the index dropped and closed below the 'rising wedge' pattern. On Wed. Jun 7, a pullback to wards the lower edge of the 'wedge' provided another selling opportunity to bears. The index closed exactly at its 20 day EMA.

On Thu. Jun 8, the index dropped below its 20 day EMA and closed lower at 7450, but on Fri. Jun 9, it bounced up to close at 7527 - losing about 20 points for the week. 

(At the time of writing this post, the index tested support from its 20 day EMA and is trading just below 7500.)

Daily technical indicators are looking bearish. MACD has crossed below its signal line (which has formed a 'rounding top' reversal pattern). RSI bounced up from its 50% level but is moving down again. Slow stochastic is falling below its 50% level.

Expect some more consolidation and/or correction. 

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing downward momentum.

No comments: