FKLI - Bears Flash Their Claws- 11/19/2012

Prices continues to fall as expected. DMI, MACD and Stochastic stay negative. The ADX is rising and now gone above its 20's signal line. This is confirming a trend in force now. Another item confirming the current strong trend is the expanding Bollinger Band. Though the Stochastic has now gone into the so called oversold zone, but with the ADX now above 20's and rising, I will keep my eyes on the MACD for a new reversal signal. Place stop either at the bottom band or at the prior day high plus 2 points.



The weekly chart has just flashed another major sell signal as price has closed below the bottom band. There has been a similar break on mid August 2011 which was followed by 200+ points decline. Then there was another break on mid May this year, but that turned out to be a false signal as the following week did not see a confirmation but instead price went  and close back above the bottom band. So you may want to  sell below 1616 minus 1-2 points next week as a confirmation of the current signal. The other indicators are confirming a sell as all of them are negative. The ADX has finally begun to rise, this could be read as the beginning of a new cycle. The emphasis is on the multi bearish divergences that has been discussed here for the past few weeks.  My experience tells me when they appear at the weekly chart, it usually mean the termination of the previous bull cycle and the beginning of a major bear cycle. I would be extremely cautious if I am holding stocks.

Though we are still in the middle of November, but you may want to be informed that we may be getting a sell signal at the monthly chart. Of course, we only get that confirmation when we get the closing price at the last of the current month trading day which fall on 30th.