FKLI - The Market Finally Blinked - 5/6/2013

 
The market finally blinked and collapsed on last Friday, the last trading day before the polling day. The Stochastic has now crossed down below its 80's signal line with the DMI and MACD turning negative. Prices have formed a double tops with the MACD forming a lower peak - thus a new bearish divergence.

Prices has now closed below the bottom band which is usually taken as a major sell signal. I went in and sell on last Thursday when price closed below the top band with a confirmation from the Stochastic. Stop should be placed at the middle band plus 2 points and move to the bottom band when if the market continues to fall.

But I need to see the currently flat ADX rises in order to be sure this is a brand new bear cycle.

The weekly chart's Stochastic, MACD and DMI are still positive. The only item went over to the bears is that price has just closed below the top band. With this, I will  interpret it as a signal that I should close off my previously longs positions.  But I would not engage any new sell position if I am trading the weekly chart because the Stochastic is still positive. And the ADX continues to stay flat and below 20's, I would not call this as the beginning of a new bear cycle yet.

With a newly formed bearish divergence at the daily chart and a multiple bearish divergence formed at the weekly chart, I continue to advocate that this market will get extremely ugly and we should soon see a major corrections (or if you want to be dramatic about it - a market collapse) Despite all the "bullish" news that have been splashed all over the local business pages over the past few months on how our national finance stay bright and healthy; how the kwai lo are rushing in to buy our stocks etc but I have been getting more and more bearish with each new bearish divergence formed. Unlike most of those feng shui masters who have been writing for the Chinese media on the outcome of this election which they always bringing in the "fundamentals" (racial composition/candidates credentials/party strenght etc ) and NOT keeping strictly to their astro calculations to decide who will be the winner. I only apply strictly chart readings and predict what should be coming out of the election. My opinion is that a major market collapse should not be too far away and it should reflect badly on the fortune of the last government.