FKLI - 22/6/09 - The Sellig Begins

I mentioned about the bearish divergence and the stepping down ADX last week as 'evidence' of the big hands may be scheming nasty things. So I was not too surprised when FKLI turned down and lost 26 points. Prices broke down below the upper Bollinger Band on last Wednesday, so following our trading rules - we take out the long contracts and enter the initial shorts contract.

The Stochastic has crossed down its 80 signal line which would be giving us another initial sell signal. The MACD also has a negative crossover and fall below its recent series of troughs which I would also take as a sell signal. The ADX continues to drop which is confirming the end of the prior bull trend, but the D+ is still above the D- and with the MACD is still far away from its zero signal line, so I would NOT park too many sell contract in yet. The next sell signal would be when price closes below the lower Bollinger Band of 1048, you may want to add on more.


Again the weekly chart is not complimenting the daily chart's bear. Price is still holding above the upper Bollinger Band and with both the Stochastic and the MACD are still positive, I cannot say this rally has ended yet. You would want to watch 1037 level on next Friday closing. If price goes below that level, then the whole big picture may has changed.

You should place stop at either the middle Bollinger Band which is effectively the 20 SMA at 1068 or if your risk appetite is stronger, then at above the upper Bollinger Band of 1182. The downside targets will be at 1030, 994, 963.