FKLI:- A correction arrived - 9/27/2010

As anticipated last week, a correction finally came last Thursday. I closed off my prior long positions when price went below the upper Bollinger Band at 1465 and I have also initialed a new short position as the Stochastic crossing down its 80's signal line. Prices also closed below the trendline support. On the same day the MACD has also crossed down its moving average. A word of caution here:- since the MACD is still relatively "far" from its zero signal line, selling from this area is an usually unreliable  signal. Usually many technical analysts will react to the "golden or death crosses" when they happen. From my experience , not any "golden crosses" and "death crosses " are of equal importance, it usually depend where they happen and whether the ADX compliment them. But I will still go in and test the water and expect this may be one of those very short term trade.

Place stop at 1471.

Please take note the ADX has started to fall from the top of D+. This is usually a classic sign of an overbought situation in a strongly trending market (that's why I did not use the Stochastic). The D+ is fast falling while the D- is getting up, we may expect a crossover by the coming week. If we do see that, it would be another sell signal.

The weekly chart ADX is still rising which mean the trend is still intact. The MACD remains bullish and continues to rise. The Stochastic has already crossed down its moving average, but it is still holding above the 80's signal line. The D+ is still dominating over the D- while prices stay above the upper Bollinger Band. So generally, there is still no sell signal yet.

Since there is nothing critically bearish yet in the daily chart, I would think this is merely a correction in an overbought market. The big boys probably taking a rest after all the so called good news came out last week. After this, they most probably will put more hypes into the media and make another round of pushing the market further northward.

For us traders, we make money regardless of which direction the market goes, except when they are not going anyway (sideway market). And we have learnt NOT to get emotionally involved to the market regardless whether it is supposedly bullish or bearish. Honestly speaking, all the past week's announced government's grand plans, I personally take them as not much different from the various "corridors" announced by the previous administration - a lot of fancy statistics and pies in the sky. But if PM Najib can make Mr. Jala his new DPM, then maybe everyone should sit up and pay attention, otherwise do not take the politicians  too seriously.