FKLI  - False Confidence Evaporated - 8/5/2013

So much for the trend as it fast frizzled out. Price swiftly went below the top band on 29/7 which effectively closed off my long positions. On 30/7, a new sell signal appeared when the Stochastic turned negative and that complimented the price below the top band signal. I went in and sold on the next day when price went below the signal day low of 1793.50.

Both the MACD and the Stochastic are negative while the DMI is undecided. The ADX has begun to fall which is indicating that prior trend has ended. But with the wiggling DMI and falling ADX, most probably we will see another listless market, especially the short trading week ahead because of the Hari Raya holiday.

I am placing a stop at the top band to take on some risk to see whether this trade will work out better. If price can close below the bottom band, maybe we would see price really falling off.


 
The weekly chart was unable to break above the 1824 level but instead went to close below the top band. Though both the Stochastic and MACD remain positive, but both of them seem to be tilting downward. The DMI also remains positive but the ADX has turned flat, this is indicating the prior trend has stalled. On this chart, I still am not getting a confirmed signal to sell yet.

Last week's Fitch downgrade was the biggest piece of bearish news that "caused" the stocks and Ringgit sell off. Of course many foresaw this was coming for sometime now. It is just the government who has been telling us our fiscal situation is "okay". Of course for most of us , it would not possible to foretell when Fitch will release their downgrade, but for those who can read the charts, the downgrades have been written all over the charts.