FKLI:- Still Sideway But Super Bear Is Lurking - 11/14/2011

As read last week this market has not been going anyway. The ADX has kept falling and now gone below the 20's, the DMI is also wiggling and the Bollinger Band has started to "squeeze". All these 3 signs are confirming a sideway situation in the market. Both the Stochastic and MACD have turned negative, so I would have more bias toward the bear rather than the bull. This is especially so when the bearish divergence is so obvious at both the Stochastic and MACD. So the logical reading would be a super bear is just around the corner. And the tightening band and lowly ADX are preparing the groundwork for the coming explosive move.

Watch out for a price break below the lower band as the confirmation of the arrival of the super bear. Another 2 items to keep an eye will be the MACD crossing down its zero line and Stochastic crossing below its 50's signal line.

 

The weekly chart is more bullish biased as both the Stochastic and MACD continue to rise and stay positive. But MACD is below its zero signal line, so I am still have some reservation on this simmering bull. At the DMI, it is showing some interesting sign as though the D- is falling which mean the bears are losing ground. But at the same time the D+ is also falling. This means the bulls are also getting weak. With ADX staying flat for the past 5 weeks, I am beginning to feel that  this could be another bull trap. This is especially for the past 2 weeks, price has not able to close above the weekly middle band which is the 20 periods moving average.

Meanwhile on the fundamental side, last week when I wrote Italy would probably become the next source of bad news and unfortunately it becomes a reality. Italy "suddenly" blow up in everybody face.  On the coming week, I am afraid we may see France and Austria becoming the next flashpoints as both country's sovereign bond yields hit new high. Unlike the fundamental "experts", technical analysts just take a look at charts and we can almost "predict" what is to come across the horizon. Like I said before: EU has not really resolved any of their problems yet. It has been a lot of hot air/ stage acts. And that is why the global financial markets mood swing like a woman having her periods. With the bearish setup at our FKLI chart, I think it would not be too long before we get "infected" by them.