FKLI:- The World Is A Dangerous Place - 3/14/2011

                                         



Last week I took note of the falling ADX and felt that the up move would most probably be a short lived one. The market actually did not go further up but instead started to collapse on mid week. Either you would have  taken out the long trade on 2 points below the previous day low on last Monday or latest on Thursday.

I had re-engaged shorts trade when price went below the upper Bollinger Band supported by a negative Stochastic. As the ADX has now turned flat, I cannot say there is a new trend yet, so I would again keep my stop tight. Initially the stop would be 2 points above Friday's high of 1499. If prices continue to fall on the coming week, I would use the lower Bollinger Band of 1494+2 as stop.

Though the Stochastic has already turned negative, the MACD still remains positive. When if it also turn negative, that would offer another sell signal. 1482 level seems to be providing a strong support for the time being, any closing below that level would bring out new selling.
                        


The weekly chart remains almost the same as last week's. Both the MACD and the Stochastic are still falling. But the ADX is "dead" at 18's and you would notice prices have been stuck within the upper and lower band. Both are classic confirmation of a trendless market.

As mentioned last week, the Bollinger Band has begun to tighten. This is a warning that this market may blow in the near future. With both the indicators pointing down and presence of a bearish divergence, I am betting that this market will blow down soon. When the MACD crosses below the zero signal line my just trigger that event. So stay alert.

Sometime back, a local stock market commentator argued that the PIIGs crisis has already 'settled" and the equities market will rally further. But the PIIGs problem has never been "settled" but merely swept under the carpet for a while. Just take a look at all their respective CDS charts, one would see very clearly they are still a big problem. And now with the China's problems look increasing likely to be developed into a crisis, nobody should try to cheat themselves by pretending Malaysia can remain 'safe".