FKLI - Watch out for new sell signal again 21/12/09

The flat ADX and the oversold Stochastic last week kept the market inside the range as marked out by 2 horizontal lines. Now we are having another classic confirmation of a range bound situation as the MACD has started falling again while the Stochastic is rising. As the MACD is now almost fallen to its zero signal line, I think you should maintain a bearish stance on this market.

Last week our stop was hit , so the earlier shorts were closed. Some of us may had engaged some new long positions as prices closed above the lower Bollinger Band which I usually take as an initial trading signal. And these long positions would had been stopped out when prices went below the lower Bollinger Band on Thursday. This kind of frustrating trades usually happen when the ADX is flat or low.

I would re-engage some new shorts position at 1258 as when price goes below the lower Bollinger Band again next. Of course I would prefer to see the Stochastic to fall again to confirm the new weakness. Another confirming signal I would be watching will be the D- should break above its previous peak as marked out a horizontal line at the chart. With that, we could be having the first signal that a trend is back in the market. Place stops at 1267.



The weekly chart is getting more bearish as price is unable to climb back above the upper Bollinger Band. Both the MACD and Stochastic are continuing to fall. The Stochastic may cross down its own 80's signal line which I would call it as an initial sell signal.

The US Dollar has made its bullish comeback as I had been forewarning for the past few weeks. A strong USD is usually bad news for stock markets. And you should not forget the existence of the multiple bearish divergences found in this chart, so you should watch out for any new sell signal that may come out from this market.