FKLI - A storm brewing ? - 7/12/09

Though we have most of the sell signals activated last week, I noticed the ADX was falling so I was thinking that we should  not engage in more selling positions yet. And as expected in a falling ADX situation, the market did not continue its prior trend of falling but instead it just holds on.

Now we have the Stochastic turning positive while the MACD continues its fall. This is again a classical sign of a sideway market where 2 indicators contradict each other. Since the stop of 1278 was not triggered last week, so we remain in the short positions. This week I would again place my stop at 1278 . I have drawn 2 horizontal lines marking out its recent range, any breakup or breakdown would be meaningful.

Please pay attention that the and the ADX has already fallen below 20's and Bollinger Band has started to squeeze, both are warning us that a major violent move should come forth soon. Since there is the multi periodical bearish divergences at the MACD, so the more logical opinion  would be to pay more attention to the sell side.


Again the weekly chart is not supporting the sell side story at the daily chart yet. Price is still able to hold above the upper Bollinger Band and D+ stays above the D-. Though the MACD has turned negative but it is still relatively "high" above its zero line, thus rendering it as an unreliable sell signal. The Stochastic is also able to hold above the 80's signal line which is not offering  a sell signal. Since the ADX has already turned flat , all I can say is the bull is currently taking a rest.

Summary - since the weekly chart is NOT supporting the daily chart's bears, so I would not engage too big a position, yet. But you should stay alert as the Band squeeze and low ADX may be just be the beginning of a new phase.

And I am getting more convinced that the USD will have a merry Christmas which if so, will surely bring tears to the equities market.