FLLI - Correction or a sideway market ahead? 17/8/09

The MACD has turned negative and continue to fall. This has formed another bearish divergence since price had gone higher but the MACD's peak has not. So from here onwards, you should be more cautious as not to be taken in by the now increasing popular bullish commentaries that the global economy is out of the wood. You should keep a tight watch on the Stochastic which may cross down its 80 signal line which would flash an initial sell signal. But at this stage of time , I would not be too bearish yet as the MACD is still 'far' from its zero line and the D+ is still above the D- , so we cannot say the bull is finished yet. But since the ADX is now above both the D+ and D- and has turned flat, that alone should tell you that the prior bull is taking a rest for the time being.

You should keep your stops at 1170. And you may try out some shorts from there, but remember to keep your stops tight for the new shorts at 1192.


Just like the previous week's reading, the weekly chart is still maintaining its bullishness with prices stay above the upper Bollinger Band. Both the MACD and the Stochastic are still positive and rising. What is most important of all is the ADX which is still rising which is telling us the current bull trend is still valid.

So with the daily and weekly charts contradicting each other, we may be caught in another trendless situation for a while before a new course of direction emerges again. So with that, if you are committing new shorts, you should keep the trade small. Please also remember the next upside target of 1,250 is not too far from here, I would not be too surprised if they make another push toward that level.