FKLI:- Stay Aside And Watch - 11/2/2010

All the classic signs of a trendless market are here:- a positive and rising Stochastic and a falling negative MACD contradicting each others; a continuing falling ADX and a narrowing range between the D+ and D-; a tightening Bollinger Band - all are telling us that this is a lousy market for taking positions.

Since the Stochastic has already reached the overbought area, I would wait for it to come down and to see whether it would help the negative MACD to bring down the market. Watch 1470 as an initial signal to sell. If done , place stop at 1500 or 1509. I am placing stops at a bigger range because in a range bound market , the usual tight stops are usually taken out easily. So either you keep off the market until you are sure that there is a new trend in the market or you place stops at beyond the recent fractal highs and lows.





The weekly chart has not flash any sell signal as the ADX continues to rise with prices stay above the upper Bollinger Band. The MACD is still moving up. Putting all these together, the bull is still in control.

Other than the MACD, the D+ is also giving a bearish divergence signal. Just keep that in mind when you engage in a long position. A divergence does not mean that the market will collapse tomorrow, but it should be respected, feared and taken caution on.