FKLI - Get Ready To Jump Ship At Short Notice ? 12/4/10

This market's bull somehow has not been too convincingly as steams seem to run out fast. This "losing steam" pattern is reflected in a relatively flat ADX since mid March .I would had closed my longs when it closed below the upper Bollinger Band last Thursday and then went back in buying long again on Friday when it again crossed above the upper band. The Stochastic has a negative cross down but still remain inside the 80's zone. I would not pay too much attention to this as yet since the ADX is at 30's. But if it crosses down the 80's, it may signal off an initial weakness in this market. The MACD remains positive but it has been losing steam too. It may be forming another bearish divergence with the price. Even the D+ is marked with one such too.

If you are still in longs, place stops at 1335.

 

The weekly chart remains bullish as the MACD is positive and pointing up. Though now a new bearish divergence may be in formation. When this kind of pattern is found in the weekly chart, you would really have to be cautious. The Stochastic is now in the overbought zone but there is no sell signal yet. And prices manage to stay above the upper Bollinger Band.  The weekly ADX remains flat reflecting the lack of strength in this market.Last week's price action formed a spinning top candlestick where there was little price action between the open and the close. Since this is appearing here during a prior rally and near new highs, it could be a sign that prices are losing their momentum and the bulls may get into trouble soon.

No doubts there is still no major sell signal yet, but with all those bearish divergences around, I hardly get  excited by the supposedly "bullish" news and statistics flying around these days. This recovery rally has been running for one whole year now, unless you choose to believe that our  economy is really flying and KLSE will eventually go beyond the high hit in early 2008, I would say this is about time for you to get some of your profit off the table or at least take a deep breath and do not get carry away by the propaganda and misinformation.