FKLI - New High Maybe But Don't Get Too Excited- 12/31/2012

The market continues to climb  and it has now broken above the resistance of 1678. If you have bought above that level, keeping stop at past day low minus 1-2 point shuld be prudent. As the Stochastic is above 80's , ADX is above the DMI and went flat for the past 3 trading days. The D+ has been falling which is telling us the bulls are losing power. I am reading all these as an overbought market. So I would not be as bullish as many of the other analysts . Of course this is not to say that the market will not go further up and collapse soon, but with the indicators showing such, I would advocate caution.

 

 The weekly chart continues last week's bullish reading as both the Stochastic , DMI and MACD are positive and rising. The Japanese Candlestick cleared the resistance. All these are confirming a buy mode. But the ADX continues to stay flat which is not supporting a new trend yet.



 The monthly chart's D+ is showing the same detoriating buy power and the ADX continues to fall. It is now at 13's so I do not expect any substantial moves. The MACD has begun to turn up again while the Stochastic is in the overbought zone. Nothing here is telling us to expect a great bull ahead, but instead there is also a bearish divergence present here as in the weekly chart, so I will be very careful to take side with the bull. 1590 support is crucial for the return of the bears, so watch that level carefully.

I am not worried about the America's so called Fiscal Cliff and all these talks how it is going affect the rest of world is just another "end of the world" nonsense. Their stock market is due for a correction and that is all to it. So is our market. Sometime our market cycles coincides with theirs, sometime we do not.