FKLI - It is a sell, sell, sell 8/2/2010

The daily chart MACD has been falling below its zero signal line . ADX has been rising to 26's and the D- is expanding outward wildly, these 2 are confirming a strong trend in the market. The bear is strong and may be gaining more strength as now the weekly chart bear is also gaining ground.



The weekly chart's Stochastic continues its fall from its 80's zone. If crossing down below its 50's signal line would add on more bearishness to this market and also act as an additional sell signal. The negative MACD continues to fall but it is still relatively "far" from its zero line. Together with the D+ is still above the D- may be the only 2 unconfirmed  indicators. But the most damaging to this chart is price has now crossed down the middle Bollinger Band which is effectively a 20 periods moving average. Many traders view this as their last line of defense for the bull. I would now watch for a week closing of below the lower Bollinger Band of 1238 for the final confirmation for this super bear.

Add onto your shorts positions as the weekly chart signals are coming in. Place stop at 1261.

Once the final confirmations are in, this would be a super bear which we could easily see a fall back to the 1,000's level.And that is assuming that we are still in a bigger bull cycle and this is merely a correction. But if we are assuming that we are still in a major bear cycle and this is the wave C, then this round could see us back to 550's. The market is playing out the effects of a multiple bearish divergences found in the daily chart and another found in the weekly chart. Normally with a divergence, market can be expected to fall in a shock and awe fashion. That is exactly the reason technical analysts were  sniggering when the fundamental analysts were harping  about the rosy picture of the global economy the past few weeks. 

The sovereign default crisis may be spreading faster and more seriously than most think. On top of Spain and Portugal you should pay attention 
to  Ukraine, Venezuela,  Argentina, Pakistan, Lithunia, Vietnam, Egypt, Hungary, Lebanon, Bulgaria, Indonesia, Bahrain and Philippine for the next possible candidate.