FKLI 30/3/09 - Corrections soon ?

The market has been taking hints from Dow Jones and continued its up move . But the moves have not been strong and it is confirmed by a flat ADX lingering at around 19's. Though the MACD has already crossed up and moving toward its zero signal line, but the Stochastic is now fast approaching its 80's overbought zone, so I would be take cautious and place stops tighter. The upper Bollinger Band minus 2 points of 878 would be prudent.

Of course I am not saying when prices get overbought that it will collapse soon. Whenever there is already a strong bullish trend in place (usually with high ADX reading ) , in fact, when oscillators get overbought it is usually a sign that the market will even go further up with great strength. But as in our current case, the ADX is flat at 19's means there is no strong tend yet, so when oscillators get into the overbought zone, we have to be cautious.

In the weekly chart, the picture is still the same as last week's which the indicators are of contradiction to each others:- the MACD is still positive and rising but the Stochastic is still negative and falling. Whenever we see such signs, the market is telling us it is caught up in a range bound situation. The falling weekly ADX is also confirming such reading. So do NOT engage any significant trading positions until the chart tells us otherwise. If prices can close above or below its recent highs/lows would be a good signal.