FKLI - It Is Another Listless Market - 5/7/2012

No, we did not get the "all systems go" confirmation last week as price stopped falling but instead went back up. The negative DMI has stopped expanding and the MACD has stopped falling. The ADX has turned flat again. This is telling us the prior down cycle has ended, at least for the moment. Price has closed back up above the lower band with the Stochastic turning positive and rises. I closed off the shorts position when price went above the lower band and bought the market again.

With the flat and low ADX , nobody can guarantee this will be a profitable trade. This is about following our trading rules and do when the signals are in. The other alternative would be stay out of the market when the ADX is below 20's. Since the ADX is low, I am keeping my stop tight at 1575. If market continues to rise, I will adjust my stop to prior day low minus 1 as the new stop.



The weekly chart's ADX and DMI are classic signs of the "dead" market. The ADX has been falling and it is at a lowly 14's and the DMI has been wiggling for 2 weeks at the same values. This same value means the bulls and bears are of same power, neither of them is having an upper hand over the other. Despite all these, I am paying attention to the Stochastic which has turned negative and continue to fall. It may just cross down its 80's signal line which I would take as an initial sell signal. The MACD has also been turning down and it may has a negative crossdown by the coming week. So I am still on the side of the bears.

The market may just stay listless until we get an announcement of the next election. Most probably we will see the market dropping off after that. Meanwhile take a hard look at your equities portfolio and clear off as much as you can.