FKLI - More Drifting But Possible Downside - 1/16/2012

The market as read last week was not going to anywhere. The ADX has been stuck at 13's for the past 9 trading days. With both the MACD and Stochastic look like they are about to turn around downward, I am still looking forward for a Stochastic crossing down from 80's to engage a new shorts position.


 

The weekly chart is more or less similar to the previous week's. The DMI, MACD and Stochastic are all positive. But the ADX continues to fall, so I am paying more attention to the overbought Stochastic. Current week's Japanese candlestick also failed to confirm last week's Doji. So again the weekly chart seems to be complimenting the daily chart's sideway mode.

In my opinion  the market will most probably continue to drift because the coming long holiday and we may not see any so called pre-CNY rally. Even if it is to go further up, I would advise caution against taking up a big position.

The S&P downgrading of the EU's 9 members is not a "black swan" thing as this rumor has been circulating in the market for at least the past 3 months or more. Of them all, France is of course the most face loving one. Though they knew long ago they have this coming, but yet they still cry and hue as if their economy is in a good shape and does not deserve to be downgraded. The next interesting show  to watch  would be how the governments (include US) will deal with rating agencies such as S&P, Moodys and others. If the governments really come down hard on them, you should NOT take any pity on them as these were the same clowns  that  gave AAA ratings to those Sub-prime Mortgage Bonds which eventually went bottom up.