FKLI:- I Am Still With The Bears - 11/28/2011

The market still has not make up its mind to take the plunge. Indicators are turning neutral again. Last week I wanted to place stop at a higher level such as the middle band instead of the usual lower band to prevent my shorts positions been whipped out was correct. The ADX has restarted to descend while the DMI seems to be wiggling (both D- and D+ are not not stretching outward) This alone is confirming to us that the trend has gone dead again. 

I would still stay with the shorts as the MACD stays negative and falling. The Stochastic may has turned positive but it looks like it may turn down again. I would add onto my shorts positions when if prices go lower than 1410 and I am placing stop at 1453.

 

The weekly chart remains indecisive but the whole picture is now at a kind of "make or break" situation. Last week price went down and tested the lower band and bounced. So for the "make " side of the story, we may see price finding a support and may go higher. On the other hand, the market may go and break the lower band's support by the coming week and all hell breaks loose if the support fails to stand. Looking at the indicators, the Stochastic is still rising so this support the "make" side of the story. But the MACD seems to be turning down and may stage a cross down soon. This is supporting the "break" side of the story. With the ADX staying flat for its 6th. week now, we are still not having a new trending move. But taking a clue from the expanding D-, I would be more comforting by staying on the bear side.

EU continues to be the focus now. The new members that will soon on the headline news should be Belgium, France and Germany. Yes, the supposedly invincible Germany, after a failed 10 years bond auction and debt insurance cost rockets.The cost of insuring German, French and Belgian sovereign debt against default through credit default swaps, or CDS, rose to record levels Friday after Italy paid a yield of more than 6.5% in an auction of six-month bills. The spread on five-year Italian CDS widened to 560 basis points from 553 basis points on Thursday, according to data provider Markit. That means it would now cost $560,000 annually to insure $10 million of Italian government debt against default, up $7,000. The spread on Belgian CDS topped 400 basis points for the first time, rising 13 basis points to 407, Markit said. The French CDS spread widened 3 basis points to 251, while Germany's CDS spread widened 6 basis points to 115. And I do not even want to mention a few other former Eastern Bloc nations that may already begging for IMF's help.

So not much bad news except maybe those coming out of America. They seem to be on their way of recovery with reduced unemployment figures, super new auto sales and surprising new numbers of orders for property constructions.