FKLI - Bulls Stimulated By The End Of America's Monkey Show ? - 1/7/2013

 
This market is offering a perfect example showing that though the Stochastic has been in the overbought zone for past 3 weeks, price keeps going higher and higher. So if anyone who just look at the Stochastic and go selling, it would be disastrous.

Last week if you had followed my method of placing stop 1-2 points below prior day low, you would have been stopped out on last Monday. If you want to rejoin the action, a prudent method would be to place a new buy 1-2 points above the recent high. In this case it would be 1685.50. After doing that again you have 2 methods of placing your stops. One would be prior day low minus 1-2 or park it at below the top band.

Since the ADX is high at 35's, so I would not look at the Stochastic for overbought confirmation, instead I would look at the ADX above the DMI as the ultimate confirmation. As it is now, ADX is now above the DMI , but it has begun to rise again. So with this, I would remain cautious with my long positions and would keep my stops tight. But I would not call for any sell.

An interesting item has just developed and that is the dreaded bearish divergence has been erased with the new high and MACD has also register new higher peak. So until a new one forming in the future, at least for now we would not have to worry about a collapse in this market.

The weekly chart continues with the prior week's bullishness. The Stochastic, MACD and DMI are positive and rising. The Japanese Candlestick is a full white body and cleared prior week's high and recent high convincingly. The only bothering item remains with the flat ADX at 12's. This is unable to reassure me that a new trend has arrived.

Just as I wrote here last time, I did not believe the American Fiscal Cliff when so many analysts were drowning in their sweat over it. The American politicians , especially the Republicans have became as despicable as Malaysia's. They were merely putting monkey shows to please their crowd but never really give a damn about their nation's best interests. But if you know be it Obama's 250,000 or the Republicans' 400,000 margin for new tax only affect less than 5% of the Americans, you would know the so called Fiscal Cliff is another BS show. So  while the "experts" are raving on a new bull now, but I am not too sure on that.