FKLI - Can Market Hold On Its Gains ? - 10/8/2012

 

 
The market continues to go further up for the most of past week. I closed off my long position on last Wednesday when price went below the prior day low. After that it is either you stand  by the side and wait for the next signal or you would brave enough to go back in and buy when price broke Wednesday's high. If you had bought again, it is still about the placing stop at prior day's low minus 1-2 points. This is especially so because the Stochastic has gone into the overbought zone.

But if you had stood aside and wait for the next signal, it is certainly not a shameful thing. Trading is all about profit and not about our ego. Since ADX has been falling and it is about to go below its 20's signal line, you can expect the market to hang around a while. So be preapred to take your profit again at the slightest indication of trouble.


 
Price managed to closed above the weekly chart top band which is showing off some strength from the bull. The Stochastic continues to fall. The MACD  is trying to turn around but it is still negative. D+ is also trying to cross up above the D-. But among all these confusions, the ADX has begun to fall again, this is solidly telling us not to get too excited yet.

Unless this market is managed to go further up for the next few weeks and is able to erase off the earlier formed bearish divergence, I continue to stay on the back of the bears. This is especially so the monthly chart's Stocahstic is also in the overbought zone and the MACD seems to be forming a bearish divergence on its own. Divergences do not mean they will DEFINITELY become a reality, but when they are found in the charts, espcially the longer term ones, it is always prudent to show some respects to their likely consequences. The last time it appeared on the monthly chart is at the early 2008, and the market later"reacted" to the US's crisis by losing 700+ points. If you think a bit deeper on our nation's current political/economic developments, maybe the charts are trying to tell us something ?