Sunday, August 31, 2014

FKLI - It Is Going Sideway But Watchout What Is Coming - 9/1/2014

The market flashed another buy signal again on last Wednesday when price broke up above the top band. But that signal was not confirmed when price failed to go higher on the following day. Instead a new sell signal came out on last Friday when price went below the top band with the Stochastic turning negative. I would sell on the coming week when if price can go below 1860. The MACD remains positive while the DMI has turned negative. But please take note the DMI has been turning positive and negative for the past few days within the 20's and 30's horizontal trench without going higher or lower. With the ADX now fallen to below the 20's level, these are confirming a listless market mode.

With this, I would expect some of the coming trading signals may be false breaks and render most trades unprofitable.

The weekly chart is same as that of the daily chart, the ADX has begun falling again. As it is now at 15's, this is another classic sign that the market is in a listless mode. This is further conformed by a tightening Bollinger Band. All the 3 indicators remain negative. The D- has been declining which mean the sellers are leaving but the D+ has not been rising and this mean the buyers are sitting aside. Both type of players remain undecided on their course of action. If I am trading the weekly chart, I would sell if price goes below 1855.

At the monthly chart, price has now closed below the top band, this is the first time it has done so since August, 2013. With this I have both the Stochastic and MACD turning negative to compliment it. I would like see the Stochastic crossing below the 80's signal line for a better confirmation. The MACD is also relatively "far" above its zero signal line to confirm a reliable sell signal. The DMI stays positive with the ADX continues to stay flat. The ADX has been flat since December 2013 which explain the lack of a big move since that time onward.

Overall the big picture has been telling me that there is a big ugly bear lurking around the corner in this market. There is bearish divergence successfully formed at all the 3 time parameter charts. In my opinion, this means we are near a major terminal point of the cycle that we may experience a really nasty sell down soon. On the fundamental sides, I think you should keep an close watch on our bank interest hikes. Traditionally this is the kind of thing that "kill" the property market first. And you know our property market has been snoozing so much cocaine for the past few years  that it is no longer able to grasp with reality. When property loans begin to go bust, they will hurt the banks and the banks will go hurt the the ordinary businesses.

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