• FKLI - Nasty Corrections Begins ? -  1/27/2014

 
Price did not go back above the bottom band as there is where I have been placing my stop. The market lost 12 points last week which was not really something to shout about. But in term of chart formation, there is something significant as Friday's closing is now lower than the recent low of 1797.50.  Meanwhile the indicators continues to deteriorate as the MACD keeps falling and it is now solidly below the zero signal line. The Stochastic is inside the oversold zone but please note the ADX has begun to rise. So for this moment , the MACD is getting increasing important for reading the chart.  The DMI is also beginning to "expand" outward , this is telling us that  the sellers are getting braver and the buyers are retreating further. As last Friday DJIA fell by a shocking 318 points, it is almost certain that we would see FKLI gapping down on the coming Monday.

 
The weekly chart is singing praises for the bear. The Stochastic has been falling like a rock and it may be crashing through its 50's level by the coming week. The MACD stays negative and falling. The DMI remains positive but it has been closing its gap. The rising D- means the sellers are getting stronger and the falling D+ means the buyers are getting scare. The ADX has just begun to fall, a solid confirmation that the prior cycle has ended. But it does not confirm a new cycle yet. Price has now closed below the middle band which is a de facto 20 periods moving average, this has added more weight to the sellers. I would watch intensely whether the bottom band can provide the final defense line to  the quick evaporating bulls.

I have been writing about the presence of a bearish divergence at the chart which usually would bring on a major correction and they are also usually very ugly. Despite all the sweet talks by fundamental "experts" misleading the public that our economy is "strong" and therefore would NOT be affected adversely by coming international storms, the charts have been telling us otherwise. The Ringgit is another example, something that I had warned of last year of its current depreciation. The hard bitter truth remains that our nation's finances have NEVER been strong since the last financial crisis, Dr. Mahathir's refusal to take medication has merely delayed and prolonged our sufferings. This time because of China's impending financial meltdown, I think we are going to suffer even more pains than ever.