FKLI:- Malaysia truly BOLEH but for how long ?10/5/2010

Well I must congratulate myself for getting it right on 1) stand aside and watch 2) drastic action happening soon 3) more bearish biased. But I forgot to mention we are truly a nation of apa pun boleh. Last Friday while the rest of the global stock markets saw blood turning into rivers, our FBM KLCI in fact gained 1+ point while FKLI ONLY lost 5 points. With this, are we trying to tell the rest of world  that our nation's financials are stronger than theirs ? Or is it about their investors are all sissies that shit in the pant over some bearish market news ?

The latest reading is a little bit clearer now as both the Stochastic and MACD have turned negative and falling. The MACD is dropping and approaching its zero signal line and the Stochastic may fall through its 50's signal line by coming Monday. Both of these are usually taken as a more confirming sell signal. The most comforting sign for the bear power would be the ADX which has started rising, any crossing up above the 20's signal line would be confirming a trend in making. This new trend in making is also been confirmed by the rising D- which has broken out its prior peak as marked out last week.

Though FKLI price action was doing something similar to the DJIA's intra day drop of 900+ points and then snapped back up, our FKLI price first broke below the range that I had marked out with 2 horizontal lines , then it went back and closed above the lower range . But it is still closed below the lower Bollinger Band, this is another bearish sign.


 

I mentioned last week's Japanese Candlestick of Doji Star was "interesting". Yes, this week candlestick is a black body , one that unfortunately did not close below last week's low. So by itself, the signal is vague. But it has closed below the upper Bollinger Band which may be taken as an initial sell signal for the more adventurous traders. The Stochastic has already crossed down but as it is still remained above the 80's zone, we cannot take this as a sell signal. The MACD has also turned negative. The previously flat ADX now turning down which is confirming an end of the prior trend.

Now that both the daily and weekly chart are almost complimenting each other in pointing at a new bear cycle, you should engage some shorts positions. As I have been mentioned here in several occasions about the presence of a bearish divergence, if this bear cycle is to developed successfully, your rewards in profit would be substantial. This is the kind of trading situation that no self respecting traders should miss out.

But having said that and knowing how difficult our national secret magic hands is in dealing with a bear cycle, you should NOT count out the possibility that they will come in again to support the market. So our gospel of trading applies again:- place stop at 1336 if you have already sold. Add more sell positions when market closes below 1322. If you are stocks player, I think it would be wise that you should take profit on your portfolio, especially for those heavy weights or so called blue chips. In my opinion, whatever upside, if there is still any, the reward to risk ratio is not going to worth it.

The local experts only begin to wake up to the Greece's crisis recently , and most of them is still not aware of what may be coming after Greece. Other than Spain, Portugal and Ireland, there may be Italy and many of the former Eastern Blocs. The major problem here is that many EU banks are heavily exposed to them. Then there is some coming out from South America, first among them may be Venezuela (the faster crude oil price falls, the sooner they go down and without any blessing from America, it should be a very nasty scenario). Then there may be Dubai revisit follows by  a few other Middle Eastern's and Pakistan. Of course, what I am most excited about is the mother of them all - China.

I completely at a loss at how so many of the experts can be so optimistic about the recovery story. Sometime early last year when I wrote about a possible return of a strong bull rally, I mentioned that at best, it will be a wave 4 technical rebound, after which we should see the final wave 5 down. I think this could be it now.