FKLI - The Holiday Mood Dissipates - 1/6/2014
 
I bought in last Monday when price went above the previous Friday's signal day high. As the Stochastic was already inside the overbought zone so I took the tighter stop approach and place it at the prior day low. The trade did not do well as price began to collapse on last Thursday. My stop was hit and the position was closed off. A new sell signal was flashed on last Friday as price collapsed further and went below the middle band which is the de facto 20 days moving average. The signal  is confirmed by the Stochastic and MACD which have turned negative. I would sell when if price goes below 1832 on the coming week.

The DMI is still staying positive but the gap between the D+ and D- is closing fast and we may see it turning negative by the coming week. Please take note the D- is rising fast, this is telling us the selling force is strong. The ADX has already turned down, this is confirming that the prior trend may has already ended. The prior trend is still considered as a bull cycle though its strength was laughable.

One major item to take note would be there is a negative divergence at the Stochastic. Though such occurrence may not be as powerful as those appear at the MACD, but I would still pay attention to them. At times, they also tend to bring in hugely profitable trades.

There are 2 major items at the weekly chart that are not too pretty for the bull. First is the Stochastic which is inside the overbought zone. Second is a large black body Japanese Candlestick which fully engulfed the previous Candlestick. (the current candle's real body contains the previous week's Candle's real body) This is usually extremely bearish as it may signifies a major reversal. At present, the other indicators are all still positive and the ADX is still rising. With these, I would have to wait for the coming week to confirm whether the bear has returned or this is merely a hiccup inside a bull cycle. So I would watch the top band support of 1832. Any breach of that level most probably bring out more selling.

As like I said in the past, I see nothing bullish about the country's economy. I think it is  high time that we should go and embrace a real restructuring and experience the pains that usually come with them. The more we delay changes, the more painful it is going to be and it may even come to a point when such exercise is beyond our ability. I think the multiple bearish divergences at the chart may just pointing at the pain that is coming.