FKLI:- Be Jumpy And Take Profit Unless You Are Shorts - 7-6-2010

 

So we took profit at 1285 on last Monday. The market fell and closed below the lower Bollinger Band on the next day, but I did not enter any shorts because the Stochastic did not confirm. Instead I bought back on the next day when prices went above the lower band again. Currently we have the Stochastic continues to go up and even the MACD has turned positive. I would pay a lot of attention to the falling ADX now as the current upmove may be one of those 3-5 days mini cycles. Since last Friday the Dow dropped 300+ points, I would protect my profit and place stop at previous day low minus 2 points which is 1291.


Both the weekly chart's Stochastic and MACD continue their fall, next to watch out for would be the Stochastic's 50 signal line and the MACD's zero signal line, upon crossing down, they would provide a more solid sell signal. At this moment, the weekly ADX is just like its daily's , it has been falling by which it is telling us there is little trend in the market yet. Previous week's candlestick of a Doji which usually signalling a possible reversal was confirmed by last week's big white candlestick which managed to close above the prior week's high.

Again I am not bullish about the market as MACD remains below its zero line and price stays below the 20 periods moving average (the middle band). Fundamentally the market 'suddenly' has another 'new' crisis breaking out of  Hungary, but as mentioned here some weeks ago, there will be many crisis waiting to blowout in the face of  the uninformed investors all over the world, EU may be just the beginning of them all, wait until you hear about 1/2 of US states that will go bankrupt soon due their inability to service their loans. But then all of them may be just small boys when China breaks their piggy bank.  China's under capitalize banks with huge hidden NPLs, trillions of  local governments' debts, red hot property market now quick freezing down etc all will add up to the mother of all financial crisis soon.