FKLI:- The Awaited Rebound Arrived But For How Long ? - 10/3/2011

 

The market crashed into another new low on last Monday before staging a rebound. You would have closed off the shorts position by latest on Wednesday. An initial buy signal flashed on Thursday when price closed above the lower band with a positive Stochastic crossing above its 20's signal line. The MACD is turning around but remain negative. With Last Friday's DJIA dropping 200+ points, it would be natural that FKLI will follow suit on the coming Monday. But since the Stochastic remains positive and rising, instead of placing stop at the lower band of 1375 minus 2 points, I would place stop a little further at Thursday low of 1351-2 = 1349.
The ADX has turned flat at above the DMI, this is confirming the end of the prior bear trend, at least for this moment.

As I mentioned here for the past 2 weeks, there has been a subtle divergence at the Stochastic, there may be a chance for this market to go a bit higher as a technical rebound. You must remember this is NOTHING more than a technical rebound in a bear cycle. Watch for upside target of 1,400 and 1440.

 

The weekly chart MACD is still falling and it is backed by a rising ADX. The rising ADX is telling us the current bear trend has not finished yet. The Stochastic has a positive cross and heading up. If when it is able to cross up above the 20's signal line, then maybe we would take a closer look at it again. But for now, the ADX is assisting the MACD bears to go rampaging.

The PIIGs crisis seems to be easing a bit with the Germany's vote last week. But rest assure it has NOT been resolved yet. The global finances continue to be in a crisis mode. You should stay alert and critically digesting every piece of news before deciding the problem is gone. Markets tend to hit us when the masses least expect it. Take gold for example, just when all the "experts' sang in chorus that gold will soon hit 2000+, it whack every one of them on the face. (they blamed it on the increased margins, I would "blame" it on the double tops) You should make use of the rebound and retreat from the equities market and wait for a better level to go back in.