FKLI - The Bears Got Kicked In The Face -5/13/2013

Just when bears like me thought the previous week gave a huge sell signal, the market came back after the election and kick me in the face. The market gapped up and immediately took out the shorts trade. As I have already pre-plan my stop , so this kind of adverse market occurence would not catch me in a panic. It is all about following the trading plan and react accordingly.

With the price closed above the top band with the MACD turning positive, I still have not engage any new trade as  the following days failed to confirm that signal because price did not go higher than the signal day high. The Stochastic only manage to react this new strange scenario on Friday when it turned positive. The DMI has turned positive with the ADX rising. I would engage in a new long position when if price go higher than 1787. For the time being, a word of warning - after last Monday's monstrous move, the remaining 4 days price actions are hardly anything to shout about. And Friday's Japanese Candlestick is a Spinning Top which warrants for caution.

 
The weekly chart has turned a bit complicated as price gone back above the top band with the MACD and DMI stay positive . But the Stochastic has gone negative. As the ADX has begun to rise, so it could be signalling the beginning of a new bull cycle. But I would need price to above last week's high in order to be sure of the new direction.

The good news to the bulls is that the earlier bearish divergence has been erased by last week's spike in price, but honestly I continue to doubt this whole new found "bullishness" as I cannot see anything bullish about the whole economy. Politically speaking, losing more seats to the oppositions and getting the Chinese partners in BN nearly completely wiped out is also nothing to be bullish about. From now to the end of the years with party elections coming on where there sure will be a lot of ugly throat trashing fights for the party new leadership, we can expect more racial slurs flying around. And I do not think Najib will have the guts and foresignts to cut spendings and debts. he will probably continue to launch more projects that bring little returns. I mean, since from the post-1998 crisis Dr. M's administration, did ever any of the PM has the courage to take the bitter pill and restructure the nation's economy and education? 

But then I am a technical trader, I would just follow the signals as they come. But I will continue to bet small on the longs but bigger on the shorts.