FKLI:- Selling Stopped But Stay Cautious - 2/28/2011

As I had noticed last week that the ADX has turned flat , hinting the market may has gone stuck up in a range. The long trade also did not work out well as the stop of 1500 was hit last Wednesday. With the bigger picture remains bearish, I have again turned short when price went below the lower Bollinger Band and the Stochastic has crossed down again. 1481 level is important support now, if prices go and stay below that level, it would mean selling has re-emerged, otherwise most probably we will see prices range bounding here and the current short trade may not be profitable.

Place stop at 1500.

                                              

The weekly chart remains bearish as both the Stochastic and MACD continue their descent. The Stochastic has just crossed below its 50 signal line which is usually a more confirming sell signal. But since the ADX continues to fall and now it is at 20 and prices have so far stayed above the lower Bollinger Band, I think this market may just hang around here for a while. Watch out for any weekly closing of below 1486 for a new signal for a new selling signal.

All the messy geo-political crisis has brought attention to crude oil which experts are telling us it may hit USD200+ soon which causes the equities market to fall. And one of our local Chinese daily even reported in their front page that Libya is the world's 3rd largest oil producer (meaning their problem is everybody problem) . Of course that is absolutely incorrect. Libya is the world's 17th biggest producer and Africa's 3rd. None of their oil goes directly to US. Their production can be easily filled in by other producers and IEA. IEA alone holds 1.6 billions barrels which is equivalent to 6 months of US total imports. And Saudi's minister of oil has been telling everybody for the past few year that he is unable to sell all their oil every month. Markets are usually ruled by players' perception ,another example here is when Libya's leader was rumored  shot, oil prices broke down. Logic would tell: if the opposition is to win the revolution today, with almost of oil industry people already left the country, would the oil supplies go back to normal tomorrow ?  It is about their emotional "thinking" that is moving the market at the moment and has little to do with the real fundamentals.

Looking at many charts now, they seems to be hinting some really nasty crisis across the horizon. With the exception of Saudi Arabia,  I do not really think all these Middle Eastern or African failed nations would really be the fuses to it. What I think the real problem  still remains at EULand and China. Never let your eye off these 2 areas for next possible real crisis blowout.