Major Large-Cap Indexes Start February Off In Much Better Positions

  • NAS100
  • SPX500
  • US30

Daily Charts

February has started well for the significant US large-cap indexes. Below we have:
* the FXCM Dow Jones Industrials CFD, the US30, on the left;
* the FXCM S&P 500 CFD, the SPX500, in the center; and
* the FXCM Nasdaq CFD, the NAS100, on the right.

We have applied:
* two Bollinger Bands, which effectively gives three areas – bullish, neutral, and bearish; and
* a stochastic as a momentum measure.

The last day of January trade saw price action that pushed all three indexes from their bear areas into their respective neutral regions. On a relative basis, this is considered a sign of strength. But, significantly, all of the indexes' stochastic have pushed up from their lower quintiles. This movement suggests that the underlying bearish momentum which drove them down in January may be waning.

Hourly Charts

Given the relative positivity in the daily charts, the hourly timeframe will help assess if the short-term traders can capitalise on this. All of the charts' Bollinger Bands (BBs) are tightening. We will watch these because BBs tend to cycle, i.e., tight bands expand as volatility increases from calm. The BBs don't have much to say regarding the direction of the volatility breakout. To this end, the hourly charts' stochastic will be helpful. If these can move into their upper quintiles, above 80, and hold in these areas, the short-term momentum is likely to build and sync with the more positively positioned daily charts. If, however, they continue downwards, the short-term hourly momentum will have a bearish bias to it. This weakness will need to be monitored to see if the daily charts' sentiment and region positions change.

Featured Image by Gerd Altmann from Pixabay

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.


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