FKLI:- Bears Bear Its Claws -11/15/2010

Like I said last week:- do not get too carried away by the extreme bullish talks from the market "experts". The bearish divergence may just play out as when you are least expected. Price broke below the upper and middle Bollinger Band in 2 days and may just go break below the lower band by the coming week. The Stochastic has crossed down below its 80's signal line while the MACD has turned negative. What is more alarming is the D- has crossed up above the D+ for the first time since late June last year. All these triggered an initial sell signal.

Please take note the ADX has begun to fall. This is confirming the prior bull trend has ended, at least temporarily.

The next set of sell signals would be to watch out for are price closes below the lower Bollinger Band; when MACD crosses down its zero signal line and the Stochastic crosses down its 50's signal line. All are usually more confirming sell signals. Place stop at 1518. 

 



The weekly chart has not turned bearish yet. The MACD remains positive and the Stochastic remains above the 80's signal line. Prices still stay above the upper Bollinger Band. The ADX has stopped rising and turned flat, this is telling us the prior trend has stalled. Watch out for next Friday's closing of below 1485 for an initial sell signal at the weekly chart.

For the past few weeks and during the G-20 meeting, every talking heads in the world seem to be raving about the end of the USD (again !)  because of the QE2. But charts have been telling me quite a different picture. You would want to be informed that the USD has been rising for the past 5 days. If USD is able to close above 78.48 in the coming week, the world may see another shock and awe type of appreciation. And if the USD is able to rally successfully, we may see the commodities  collapsing dramatically.Or maybe I should ask: have it already started ?  A few days ago, a local financial writer who is a hardcore buy and hold addict was questioning unashamedly  have anybody talking about the PIIGs crisis again. His reasoning  being that many crisis are just alarmist and any retracement or corrections merely serve as an opportunity to buy some more. Maybe his info input is on a slow motion. Hello ????? Ireland and Portugal are back in the news as their crisis never really went away. If these 2 fall, many of the EU banks will be screwed , big time, due to their huge exposure .

No matter whether you are trading or investing in a financial market, timing is  always of the utmost importance.  An old lady once told me:- " A failed speculator will turn into an investor." Yes, it certainly never make sense if you can reap a 50% gain in a month, then why bother with a 50% gain buy and hold for 5 years ?