Sunday, May 11, 2014

FKLI - Yeah, We All Still Are Waiting - 5/12/2014

Displaying OD FKLI D.png 
As noted last few weeks, this market has been stuck in a listless mode. Price bounces off  a 30 points range for the last 2 weeks. Yet the indicators continue to deteriorate further with the MACD stays negative and falling. So is the Stochastic. Both of them have formed negative divergence which may mean a massive sell down may be on its way. The DMI is also negative with ADX begins falling again. It has now reached 11's level which mean the current market is quite "dead". This is also been confirmed by the tightening Bollinger Band. Of course the tightening band is also telling us that a monstrous move may be coming soon.

Though  the previous Monday price did hit above 1868.50 intraday but it was not able to close above that level but instead went tumbling 16.5 points down and closed instead below the top and middle band in one go. As I have mentioned numerous times here in the past, whenever the ADX is below 20's and especially it is still falling, position traders can be excused for not taking the trade signals as in such situation, the market usually would flip and flop and incur many small losing trades. Unless the new trade signal is in line with the bigger picture. As at now, the big picture is telling us a big sell down is likely because of the presence of negative divergences and the MACD is getting nearer towards the zero signal line. So I would prefer to trade the sell side over the buy side.

But having said that, Last Monday's sell signal that came with a confirmation from the Stochastic also ended up as another dud trade because price hit an intraday low of 1839.50 which would confirm the Monday's sell signal but only saw it reversed all the way back up above the bottom band. And on the next day, price went even higher above the middle band which effectively killed off the short trade. This just show the perilous trading environment during an extreme listless market mode.

As at last Friday there has been no new trade signal. So if you have to trade, go trade intraday for now.

Displaying OD FKLI W.png 
All 3 indicators at the weekly chart stay positive. The Stochastic is now inside the overbought zone. This is something that I would pay attention to as the ADX is low and flat. Again price went below below the top band intra week and came back up and closed above it. The D+ is falling while D- is up, this means the buyers are getting out and sellers are coming in to test the market. The ADX stays flat at 16's for the 8th. straight week. So taking all into consideration, this is a "dead" market. The Japanese Candlestick is another one of those "long legged" type, basically mean nobody is sure of anything yet/ decision postponing. So traders would have to wait too.

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