FKLI:-  Maybe A Technical Rebound But The Worse Is Not Over - 31/5/10

Last Thursday the market recovered some lost ground on China's declared supports for Euro news, but is this the end of the falls in this market? The MACD has turned flat but remain negative, the gap between the MACD and its moving average remains wide. The Stochastic may be in the so called "oversold" zone , but bearing in mind that the ADX is now at 27's, it would be prudent that we watch the MACD instead. But I will place stop at 1285 to protect profit.

As the ADX is still rising, so I cannot say that the current bear cycle s over yet.

The weekly chart Stochastic has just fallen through its 80's signal line which offers the initial sell signal. The negative MACD is continuing its fall, any crossing down its zero signal line wold probably bring out the big bears in numbers. The new low in the week qualified the extreme sell signal of the D- crossing above the D+, but the weekly candlestick managed to close back above the lower Bollinger Band and form a Doji which may be interpreted as temporary bottom. The flat ADX means that a strong trend has not emerged yet.

So in the coming week, we may expect some technical rebound in a grossly fearfully sold down market, but I do not think the bear cycle is over and selling will resume soon after that.

For the equities investors, this is a live example how one should sell off their shares no matter how "blue chip" they are considered. In a bear market, nothing can stand in the way of a panic.