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Monday, July 24, 2017

S&P 500 and FTSE 100 charts (Jul 21 '17): bulls assert themselves, but bears refusing to give up

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 pulled back briefly towards the down trend line (refer last week's post) on Tue. Jul 18, but bounced up after receiving good support from the 7450 level.

The index rose to touch a new high of 2478 on Thu. Jul 20 but closed slightly lower to form a small 'reversal day' bar that triggered some profit booking.

On a weekly closing basis, the index gained about 0.5%. Daily technical indicators are looking overbought. MACD and RSI touched lower tops while the index rose higher. The negative divergences can lead to another test of support from the 7450 level.

Note that the two down-days (Thu. & Fri.) is showing the highest volumes during the trading week. Probably an indication that 'smart money' is moving out.  

Can a deeper correction occur? A 10-15% correction for the index is overdue, and will be technically 'healthy' for the long-term bull market. But hoping for a correction doesn't mean one will occur. Just as hoping for the US President to deliver on his election promises has proved futile so far.

On longer term weekly chart (not shown), the index closed at a new high - well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought, but showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern


Note the following comment from last week's post on the daily bar chart pattern of FTSE 100: "The 'support-resistance' level of 7385 has become a clear battle line between bulls and bears."

The index dropped below the support level of 7385 intra-day on Mon. & Tue. (Jul 17 & 18), but bounced up to close above 7385 on both days.

That was a trigger for bulls to make an attempt to breach the (purple) down trend line - below which the index has been trading for the past 7 weeks.

On Fri. Jul 21, the index did breach the 7500 level and the down trend line intra-day, but failed to sustain above the trend line and closed just above the 7450 level with a 1% gain on a weekly closing basis. 

The formation of a 'reversal day' bar (higher high, lower close) on Fri. may lead to some consolidation or correction before the index can convincingly move above the down trend line.

The index is trading above its three EMAs in a bull market. Daily technical indicators are in bullish zones, but not showing much upward momentum. 

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 and showing a bit of upward momentum.

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