FKLI - Market Overbought - 4/15/2013

 

The market pushed further north but I get increasing uncomfortable as the Stochastic is getting overbought. I shifted my stop to prior day low instead of the top band as to protect my profit. Finally the stop was hit on last Friday and my positions was closed. I have not engage any new position as there is no new signal yet. I will enter into a new shorts position if when price goes below the top band with a confirmation from the Stochastic. Friday's Japanese Candlestick is a massive bearish Engulfing line, when this happens in a uptrend, there is a strong possibility that the bulls are losing the scripts to the bears.

The Stochastic has already turned negative and formed a minor bearish divergence. I am waiting for it to cross down its 80's signal line for the next signal. The MACD and DMI remain positive. But since the ADX lies flat at 13's, it is the Stochastic that rules this market now. By the coming week the market can either trigger a new sell signal or it will go sideway as indicated by the lowly ADX and contradicting MACD and Stochastic.

 

The weekly chart continues to favor the bulls with all the 3 indicators staying positive and rising. Price stays above the top band. All is well except with the ADX which continues to stay flat at 15's. This is not confirming a new trend yet. The multi bearish divergences are still intact. So I continue to distrust the bulls.

For the past few weeks, the local printed media have been publishing news that foreign funds are rushing in to buy local stocks. The dramatics used by the media immediately  put me on alerts. My trading experience tells me whenever the media starts to act feverishly, it is usually prudent to start look at the opposite direction.