FKLI:- Nothing Bullish About It - 9/5/2011

The market came back from a long holiday with a vengeance. The one day gain at the cash market made it to the front page of local newspapers. Technically speaking there is nothing concrete to say the worst is over. The MACD seems to be turning around but still remain negative. So is the Stochastic. The DMI stays bearish but with the ADX now hovering above the D-, it may be telling us that the market could be oversold, at least temporarily.

Even though price managed to close above the bottom Bollinger Band , but without any complimentary confirmation from the indicators, I merely closed off my shorts positions and will wait for further development before engaging in new positions. Since the ADX has already gone flat and with the MACD and Stochastic set to go different direction, I would think the market would go listless for the next few days.

 

As far as the weekly chart is concerned, there is absolutely nothing bullish to talk about here. Both the MACD and Stochastic continue to fall. The MACD has just fallen below its zero signal line and the Stochastic is below its 50's signal line. Prices  are also staying below the bottom Bollinger Band, all these threes  are dreadful bearish signs.  Meanwhile ADX continues its rises which mean the bearish trend is still intact.

The DJIA may has reached its overbought level in its current technical rebound, by the coming week if their market breaks down 10800, we may see fresh selling emerging. So for the FKLI market, you may trade the buy side of the market on a short term basis and you have to be ever ready to kick down the door to get out if something happens. Keeping on the sell side will be a more prudent game plan.