FKLI:- Watch 1531 - 11/8/2010

The market gapped up on last Monday but again failed to follow up with more upside and volume. The Stochastic is now in the overbought zone while the MACD has begun to turned positive again. With the ADX staying flat,  I do not like this market very much except to say it would most probably drift slowly towards its last historic high of 1531. That level would act as a strong resistance and I would think the big players would push it a little beyond to set a bull trap. I am not very convinced about the current move because the presence of negative divergence.

I would not go against the trend by entering into shorts at this moment but neither would I place huge bets on the long side. But I would keep my longs and place stop at 1504.

 
 

The weekly chart continues to stay bullish as the MACD and ADX are still rising.

Summarily speaking:- Stay long and watch 1531. Since there are divergences, so you should NOT get too carry away as the big bad bear may be lurking behind the woods getting ready to jump us.