FKLI:- Will Euroland's Crisis Trigger Another Selldown ? - 11/22/2010

Last week the Stochastic triggered another sell signal when it crossed down its 50's line. But the lower Bollinger Band seems to be providing a good support as prices went to test there but somehow did not close below that level. With that, the Stochastic has now shown sign of turning again. I would suggest you close the short positions and wait for a new set of signals. But any closing of below 1478 would mean the bear strikes again. On the other hand, any closing above 1517 would warrant a new long positions.

The ADX is continuing to fall indicating there is little trend in this market. With a weak ADX, you should apply the Stochastic to trade the market instead of using the MACD.

The weekly chart still has not flashed any sell signal as price stays above the upper Bollinger Band. I would watch out for any breach of 1401. MACD has turned around and point downward but it is still positive. The Stochastic may has turned negative, but it is still maintaining above its 80's signal line. The ADX has gone flat for the second week, confirming that the bull, or whatever left of it, has lost momentum.

As the daily chart is more bearish biased now, I would pay more attention to any new sell signal. The market players may be watching the latest development of the Irish and the Portuguese crisis as we may see another rerun on  Greece. As many of major German and French banks are highly exposed to those countries' debts, extreme permissive-ism may cause a public run on their deposits.