FKLI:- We May See A Short Term Rebound - 3/21/2011

Another round of trade that did not go particular well. With the flat ADX, I warned of the necessity to keep a tight stop on our trade. Prices gapped up and down the whole of last week without taking any clear direction. Please note the price has now gone back above the lower Bollinger Band with the Stochastic turning positive. I will buy again if the coming Monday price goes above Friday high of 1501.50.

Though the MACD is turning but it is still negative and below its zero signal line and  DMI is also negative , so the bigger picture is still bearish. Again with the flat ADX, I would keep a tight stop at 1487.

BUT, both the MACD and Stochastic may be forming a minor bullish divergence with the recent lower lows but higher troughs. So I am harboring the thoughts that the recent corrections may be over and we may see a new bull rally again.

                         
 

The weekly chart ADX continues to fall and the DMI is wiggling. A classic confirmation for a completely trendless market. Prices went below the lower band briefly during the week but again managed to close back up inside the band. This is just another confirmation there is a lack of trend. The MACD is still falling but the Stochastic is turning around. This may be complimenting the possible turnaround at the daily chart.

With  another possible short term rebound , but you should  remember that  the bearish divergence still overhanging over the weekly chart, so for the bigger picture I remain biased toward a bearish view . With increasing geo-political conflicts and the PIIGs crisis that refuses to go away, I think it should be prudent for you to share my views too.