FKLI - Technical Rebound Losing Steam ? - 3/11/2013

 

The market did something extraordinary on last Monday when prices went down below the middle band during the day but went back up and close above the top band. This had effectively triggered my stop (remember the gospel of obeying the trading rules). I went back in and buy again on the next day because :-1) price still closed above the top band 2) both the Stochastic and MACD are still positive and rising.  I treat this as "one of those unkindly things in life" that everybody encounter now and then, but I stick to my trading plan and react accordingly. Of course there are many people who would just sit there and blame the fat fingers that "accidentally" sold some Petronas share down by a few Ringgit.
As the ADX is still falling, I would pay more attention to the Stochastic over the MACD. The Stochastic has now entered into the overbought zone, so I would want to keep my stop tighter. Taking the top band less 1/2 points would be prudent or if prices are unable to go further up, I would advocate using prior day low minus 1/2 points as stop in order to protect profit as I feel the technical rebound may be coming to an end.
As mentioned earlier, the ADX is falling and getting nearer to the 20's zone and the DMI has started to wriggle like a worm. Both these are hinting that the market may be going into  a listless mode. 
 

 The weekly chart's indicators remain negative but both the Stochastic and MACD seem to be trying to turn around. The bullish part of the story here is that the Japanese Candlestick has closed above the middle band and last week's high. If price can go higher than this week high of 1659.50, then it would trigger an initial buy signal here. The DMI is still negative but the D+ is trying to close up the gap with the D-, this is telling us the bulls are trying to fight back. But the ADX remains flat at 16's which is telling us there is no new trend here yet.
The market is getting a bit of jumpy these days so I do not expect any major trend coming in soon. So it will be more profitable to apply the oscillators to trade the market for short term profit.