FKLI - Technical Rebound Fizzles Out - 11/10/2014

As the Stochastic continued to get into the overbought zone, I began to tighten my stop to prior day low. So by the following day my positions were taken out. By last Thursday price had closed below the top band with the Stochastic going negative. I engaged new shorts position on the following day when price went below the signal day low.  The MACD remains positive but it is turning downward. The Stochastic has already turned negative and it should go below its 80's signal line by the coming week. The DMI has turned negative , so if we can get price to go lower than 1823, that would trigger another new sell signal. The ADX has begun  to fall again, this is telling us the prior cycle has ended. I am placing my stop at above the top band and tighten it further if price can continue to fall.


 

Last week's baby bull quickly evaporated away as price went high but came back down with a thud. The weekly Japanese Candlestick is a Dark Cloud which mean the previous bar moved up strongly but the current bar's price opened higher but closed much lower. And price has closed dangerously near the bottom band, and if price goes below that level, it would  mean the rebound is over. The MACD stays negative but the Stochastic remains positive, so we have a pair of contradicting indicators which usually mean the market is getting into a listless mode. The DMI stays negative but the D- continues to fall from its previous extremity. This means the sellers are still leaving. But the D+ has turned around and fall, this would mean the buyers are also not coming in. The ADX has now fallen below the 20's signal line. The low ADX, contradicting indicators and sellers leaving but buyers are not coming in all add up to a sideway market situation.

As mentioned here on numerous times, I still think this market is waiting for a major correction. What happened during the past 3 weeks was merely a technical rebound. As at this moment, I still firmly holding on that thinking.