FKLI - I get nervous - 26/10/09

Last week either you are still hanging to your longs because 1238 stop was not breached or you had taken them out on Wednesday when it went below the previous day's low minus 2 points. If you are still holding the longs, then place the stop at 1257. If you have no position in the market, it is okay too. You may re-enter long position if price breaks last high. Otherwise you may want to wait for a new sell signal to materialize.

The Stochastic has already has a negative crossover, but it is still above the 80's level. I would take a crossing down the 80's as a new initial sell signal. The MACD may still maintain positive, but the bearish divergence is just getting uglier. But as long as it stays positive, you have little reason to sell as that would be going against the trend, especially price still able to maintain above the top Bollinger Band. The ADX has now risen above both the D+ and D- and has turned flat which is telling us that this market may be overbought. A flat ADX usually mean the market is losing steam. But of course, the market can remain "overbought" for days and weeks before it collapses. So at the moment, you just make yourself of such and it is not yet becoming a signal to sell.


Though the daily chart has become a bit of shaky, the weekly chart continues to be bullish as ever. Prices still able to hold above the upper Bollinger Band while the ADX continues to rise. This is complimenting the bull is with a trend. The Stochastic has already a series of minor bearish divergences as each peak is lower than the
last. You would be wise to monitor this if crosses down its own 80's signal line.

As discussed here last week, FKLI has already achieved its 61.8% retracement. It next possible target would be the 75% level. Of course nobody can tell you for sure whether it will go there. I would exercise extra cautions as from now onwards especially with the daily volume dwindling. I also take note the DJIA is also within 200+ points of hitting its 50% target. For a much more matured financial market such as theirs, a 50% retracement level is usually more prominent. It is because of such coincidence of our cycle with theirs, you should be more prudent with your trading.