FKLI:- Caught In Another Range - 10/25/2011

 

Just as expected, the little bull swiftly flipped and fell. You would have taken out your longs when prices went below prior day low on last Tuesday and turned short on last Thursday when price went below the upper Bollinger Band with Stochastic turning negative. But I would not be too hopeful on the new position as the DMI continues to wiggle which is usually a sign that the market has gone into a range bound mode. I also take  note the ADX continues to fall which is another sign there is little trend in this market. The most tell tale sign of a sideway market mode is the contracting indicators as the Stochastic is falling but the MACD remains positive.

With DJIA's last Friday strong performance, I would the new shorts taken out on the coming Monday when price goes back up above the upper band at 1442.

 

The weekly chart Stochastic continues to rise while the MACD is also continuing its reversal. But the MACD and DMI still remain negative. At least the ADX has stopped rising and turned flat, and if it starts to fall, then we may call an end to the prior bear moves. For the moment, as long as price stays above the lower Bollinger Band, I would remain cautiously bullish on a up move.

Unlike DJIA which I read it as very bullish , FKLI has little evidence to follow. My current thoughts remain that it is merely a technical rebound in a big bear cycle with a low 1,200 as its "compulsory" target. This should coincide with current EU crisis, latest CDS spreads of Spain, Italy and France may suggest them as the next bombshells.