Sunday, September 21, 2014

FKLI - Support Holding,  So Market Reverses Again - 9/22/2014

Acting on the previous Friday's signal, I went in and sold on last Monday. But the trade turned out to be a dud as price gaped back up and hit my stop at the bottom band. Though we have the price closed above the bottom band but we have not yet obtain any complimentary confirmation from the indicators. The faster reacting Stochastic though has hooked up but it remains negative. Both the MACD and DMI also remain negative.
The ADX has turned flat which is telling us the recent "trend" has ended, at least temporarily. With the ADX at below 19's , we may see some sideways market for a while.

The next trading plan would be : unless I get a new buy signal soon, the more immediate plan would be to sell again on below prior day low and use the signal day high plus 2 as stop. If it is a buy signal , use the bottom band minus 2 as stop.

I take note the current chart formation shows a double bottom with the MACD registering a higher trough. In another word - a smallish bullish divergence has already formed. So I would also pay attention to a new buy signal. 

The weekly chart's support of 1832 still hold up. The market went down to test that level and was able to bounce back up though it still closed below the bottom band. The MACD continues to fall and stays negative. The Stochastic after rising a bit and has now turned down again. The DMI stays negative with the ADX remains flat. So for the weekly chart, the emphasis is still on the sell side. 1832 is the support to pay attention to.
Both the daily and weekly chart's earlier formed bearish divergences remain intact, so the big picture remains bearish. But at present, the daily chart seems to be forming a minor bullish divergence, so maybe in the short term we may see a sizable upward move before the market collapses again. For the traders, we just obey the next signal and trade accordingly. But never forget placing the stops.

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