FKLI - Stand aside and watch - 7/9/09

My observation last week on this market was that it is caught in a range bound. And what happened was prices stayed within the Bollinger Band and then on Wednesday, it gapped down below the lower band which effectively took out our stop. Then it went back into the bands again.

As we are having contradicting negative MACD and a positive Stochastics which is also accompanied by a falling ADX and a squeezing Bollinger Band which are all classic signs of a range bound market. I would not do anything at this time but to wait for a more convincing new signal. One of these signals would be a breakout from the range as marked out by 2 horizontal lines on the daily chart. Another signal would be the ADX reversing and start to rise.


The weekly chart is still maintaining its bullishness as price continues to stay above the upper Bollinger Band with a positive MACD and the Stochastic stays above its 80's signal line. But there is an important item to watch out from now onwards, and that is the ADX is now above the D+ and D- but has turned flat. This should be taken as an overbought signal or a sign that the bull is losing steam in a strong trending market. Any weekly closing below 1155 may just flash the first sell signal in the bigger picture.

So, summarily speaking:- stay aside and watch for the time being.Any breakouts above or below the 2 horizontal lines marked out would warrant your attention then.