FKLI - Zzzzzzzz -13/7/09

Another week of going nowhere. Price continued to stay within the Bollinger Band while the daily ADX has drifted below 20's signal line. Both confirming a total lack of direction for this market.

Both the Stochastic and MACD continue to drift downwards. The Stochastic is getting nearer to its 50 signal line and the MACD is also falling towards its zero signal line. If by next week, both these indicators cross down their respective signal line, it could be the beginning of a more significant sell down. Another sell signal would be price crossing down the lower Bollinger Band of below 1055. But with the falling ADX, you may engage some initial selling positions but I would not take a too heavy positions yet. If done, place stop at 1070.

Due to the presence of a bearish divergence found in the MACD and the deterioration in the indicators, I am getting more worked out for a major sell signal.


As for the weekly chart, it is again failing to offer any solid sell signal. The Stochastic continues to fall, as mentioned last week, you are watched for a possible cross down below its 80 signal line for an initial sell signal. The MACD has beun to "bow" its head which is telling us its earlier upside momentum is fizzling out. A cross down with its moving average will signal another initial sell. The ADX has begun to fall again which can be interpreted as the end of the prior trend. Last week I cautioned about a weekly closing of below 1060, but that did not materialize. Though it did went below there but it still managed to close back up above. This week I would watch 1051 which is below last week's low for a sell signal.

Trading strategy will be same as last week's - trade small, keep stop tight. But you should be more bearish biased and act on new sell signals but do not jump immediately for any new buy signal unless you see more confirmation.