FKLI - Market Pauses And Ponder But Can It Avoids From Getting Crushed ?- 3/25/2013

 After the previous week's sell down, last week saw price begin to stall side ward as the sellers fail to push prices further down. I am now revising my stop to the middle band plus 2 points. And I would add onto my sell positions if when price closes below the bottom band.
The Stochastic and MACD stay negative and continue to move downward. As the Stochastic is now below its 50's level and MACD is below its zero signal line, both add more bearish thoughts to the shorts trade. The DMI also stay negative but the ADX has turned flat at 20's which reflects on the current sideway mode.


 
The weekly chart Stochastic which is positive continues to contradict the MACD which is negative and falling. As the MACD is now near its zero signal line, I would be more careful for a possible cross down here. The DMI stays negative but the ADX remains flat for the 5th. consecutive weeks. Together with the contradicting indicators, the ADX is also telling us there is no trend in this market. I would look for a closing above the top band or below the bottom band as an early indicator for a new trend. another approach will be watching out for the 1590's level which has been tested several times as a support. (see horizontal line marked out in the chart)





Regardless when the election will be announced and held or who will win, the big picture as played out at the weekly chart is that the market is poised for a major correction as the dreaded multi bearish divergence that has already been formed at the weekly chart. I have been talking about this for the past few weeks. Of course sometime divergences may not come into play (which is rare), but whenever I see them - I would reduce my longs positions or I would close them off completely  and I will prepared myself to engage new shorts position heavily. (because they are always very profitable ) Though there is no new bearish divergence found in the daily chart, but there seems to be another type of bearish chart formation found therein. The daily chart seems to be forming a bearish Head & Shoulder pattern and it may just completed its "Right Shoulder". If so, I would advocate watching out for its supporting Neckline. Any price closing below that level would likely bring out a great horde of sellers .