FKLI :- Buy now but don't get too complacent - 11/1/10

Last Monday price broke up again and this time the expanding D+ took out the prior peak as marked out a few weeks ago. With that, we are also having complimentary confirmation for a buy from:-  1) price closed above the upper Bollinger Band; 2) a positive MACD rising above its zero signal line and 3) a rising  positive Stochastic. Place your stop at 1282 or since the Stochastic is now overbought, maybe you should take profit with previous day low minus 2 points.

The weekly chart comes with a solid price closing above the upper Bollinger Band. A powerful move that triggered the ADX to start rising again. Meanwhile the Stochastic has crossed up again but the usual slower reacting MACD is still negative.

Back at the daily chart, I note that the ADX has begun rising and just crossed up against the falling D-. This is usually taken as a major buy signal. So could this be the beginning of another new major bull move? As far as trading is concerned, I will stay long because all the signals are pointing to that direction. But if you are one of those "investors", then I would NOT think you should be too overly joyous yet as the previously formed multi-periods bearish divergences are still there. Unless they are taken out (means a higher peak formed), I remain cautious.

Assuming that we are still in a major bear market and that the current wave is just a technical rebound, our market has already covered the 61.8% Fibonacci Ratio retracement. (Dow Jones is at their 50%) So at these levels, our trading strategy should be cautious and switch side whenever situation warrants and certainly not applying those "buy and hold" tactics.