FKLI - Retracement Begins - 11/4/2013

I did not get back into a buy trade as price did not went above the previous Friday's high. On last Wednesday though price did went higher than the prior day high but the Stochastic remained negative, so again I did not enter any new long trade. Instead the indicators started to deteriorate. Price finally broke below the top band on the last trading day with a negative Stochastic turning down and the MACD went negative. With this, I sold on the next day when price went below the signal day low. The DMI remains positive but the D+ begins to come down. This is indicating the bulls are retreating. The ADX has also begun to fall, this means the prior trend may has ended, at least temporarily.

I am using the top band plus 2 points as stop. I am a little cautious as last Friday Japanese Candlestick was a white body (means open low but close high), it may means that the market is still refusing to "die". Anyway a stop is always compulsory and if really the market decide to go back up. I would take it as another "one of those things in life" and cut the loss. 


 

 At the weekly chart, as I mentioned last week, the flat ADX is not very conducive to any market trend. So price did not move any further from the previous week's. With the flat ADX remaining at 19's, I am paying more attention to the Stochastic over the MACD. It has now gone into the overbought zone . So from here onward, I will be watching out for a negative cross down at the Stochastic and a price falling below the top band as a new sell signal. The DMI remains positive but the D+ is again dipping its head. This means the bulls are losing interest again.


 
The monthly chart shows that 1834 remains a strong resistance. The Stochastic is below the 80's but seems to be turning up again. The MACD is positive. Both the Stochastic and MACD has formed a negative divergence. The ADX remains flat for the 4th month confirming a lack of momentum. I do not trade the monthly chart but I always keep an eye on it for the bigger picture. And in the monthly chart, I always prefer the Stochastic over the MACD as the latter is much to lagging. Now I would watchout for a breakup above the 1834 for the bull or a closing (last trading day close of the month)  below the top band for the bear.

The market may be going into a retracement phase. News from the America is not too pretty for us as they may be starting to end the QE earlier than the market thinks.