FKLI - 27/4/09 - What me worry ?

The market just continued to climb higher contradicting all your experts' preoccupationed bearish thinkings. This is just another fine example of their standard behaviors that when the market warrants cautions and they get euphoria, but when the market is already confirmed in a bullish mode, they turn unnecessarily "prudently cautious". As I said last week that I have no reason to believe that the bull is over as there were no yet signals in the charts.

The daily ADX continues to go higher and now it is at 44 which is confirming the market's strong trend. As long the ADX is at high level and rising, we should keep our eyes on the MACD indicator as it is a trending indicator. Many people have been warning you on an "overbought" situation in this market because they see the Stochastic has gone in to the 80's zone and they think the market may weaken soon. In a strongly trending market, an overbought oscillator indicator can stay "overbought" for weeks or months and price will just reach one new highs after another without any corrections. Of course I think nobody in this world can tell us for sure when that a move will end, but for us technical analyst, we need to see some evidence to warrant such a comment.


Meanwhile the weekly chart met Well Wilder's extreme point trading rule by going higher than the previous week's high, so the weekly chart signal is confirmed . Both the MACD and the Stochastic continue to be positive and rise. In another word, the weekly chart's bull is well supporting the daily one. And I note the weekly MACD is fast approaching its own zero signal line, when crosses, it would present another buy signal and this kind of signal is usually a more powerful kind.

At this moment, I would just place a stop at 971 to protect profit . Other signs I would keep a watch out will be a MACD cross down or the Stochastic crosses down the 80's signal line or the ADX turning flat or start to fall. Otherwise why worry so much about the return of the bear and misses out all the fun ? Since the market has already breached 996, I would look at its next target of 1050's and to con what our politicians always say: "God's willing,", we may even see 1115.