FKLI:- May see a tighter range BUT watch out for the big bad bear - 10/18/2010

 
As I mentioned about the flat ADX last week, this market did not go too far on either direction. The MACD remains bearish and continues to fall. The Stochastic has  crossed down. As it continues to fall and if when crosses down its 80's signal line, it would offer an initial sell signal. The ADX has resumed its fall again which may indicate the market may even get into tighter range.

 

I am entering new shorts as prices closed below the upper Bollinger Band . The signal is complimented by a negative Stochastic and MACD. As mentioned earlier, when the Stochastic crosses down below 80's, I would add on new sell positions. As the ADX is falling, I would use the Stochastic to trade this market until something more concrete comes on. Place stop at 1493.

 
At the weekly chart, a spinning top candlestick appeared which usually mean prior upside prices is losing momentum and the bulls may be in trouble. The Stochastic has turned negative and started to fall. But it is still holding above its 80's signal,so there is no selling signal yet. This is especially so since the MACD remains positive and is still rising. Prices is also above the upper Bollinger Band and the ADX maintains its rises. So the weekly chart is still more in favor of the bulls.

As the new high reached last week failed to bring along a higher peak from the MACD , thus forming another bearish divergence in the daily chart. A bearish divergence already existed at the weekly chart's MACD for some time and it is currently forming one at the Stochastic. With all these writings on the wall and the general non-events of the newly announced budget, you should be very cautious about all these bull market talks (or can we call it another bull shit ?) Generally I think the government has ran out of new ideas as how to stimulate the economy except to fall back to the Mahatir's game of building more mega projects which does not rectify our economic structural problems.