FKLI:- The Rebound Is Weak - 10/10/2011

Even though I expected the market would probably whip first before we can see a new direction and therefore I had set the stop a little lower, but it was still taken out on last Monday. I did not engage any new shorts because the Stochastic failed to confirm the down move. I have instead re-engaged new buy again on Tuesday when price closed above the lower band. As I noted here last week, I am not too bullish about the current move except taking it as merely a technical rebound in a dominating bear market.

As at now both the Stochastic and MACD are positive and continue to rise. The ADX has started falling from above the DMI which is confirming the end of prior bear trend (at least for the present time being). The DMI remains negative and the MACD is relatively "far" from its zero line. Price failed to secure above the middle band which is the important 20 periods moving average. So you should  not get too excited over the current move. Place stop at 1360.

 

The weekly chart's MACD continues to fall and it is backed up by a rising ADX which is now at 32's. This is confirming the bear trend is still intact and remain strong. The Stochastic has turned positive but remain below its 20's signal line. Meanwhile price stays below the lower band. Both these are not offering any initial reverse signal.

The market has been playing on the new budget goodies, but it turns out to be not as excited as everybody thought. So maybe you should think of "buy on rumors, sell on the news" ? Meanwhile the Euro crisis continues to play out and no concrete solution has been found.