FKLI - Stay Aside And Watch - 3/12/2012

 

Despite the confirmation from the rising ADX earlier, this turned out just another flash in the pan up move which quickly fizzled out. This is showing yo us the importance of placing a stop for every trade so that when the market unexpectedly reverse, our profit and loss will be protected. I closed off the prior buy position when price went below the top band/2 points below prior day low on last Wednesday. As I was preparing to engage new shorts, the market is doing something strange - prices have been rising the past 2 days while both the MACD and Stochastic continue to fall. The ADX has also begun to rise when there is hardly any trend in the market. So I am confused here, and my sifu always say when one is not sure what the market is doing, then he/she should stay out. So I decide to stay aside and watch what the market will do next before deciding what to do.

The next trading plan would be to sell below prior day low because the indicators are negative. Or I would buy again when if price go above 1597 with indicators turning positive again.  Once new trade is engaged, stop should be place at prior day low minus 2 for longs or high plus 2 for shorts.



The weekly chart has turned a little less pretty as the Stochastic has turned negative while the MACD continues to rise. The ADX stays flat at 17's , somewhere it has been at for the past 3 weeks. Price went to test high but was unable to hold onto the gain. The week ended with a 10 points loss. As like the daily chart, I would like to wait for more evidence before forming an opinion on this market.

I think there may still a bit of upside for this market to go with the Najib's various feel good announcements but I would not want to be too carried away. Though I am not an economist, but still it would be difficult to see how the government is going to pay for all these recent crowd pleasing spending. I firmly remain cautious on the daily chart's nasty bearish divergence formation.