FKLI - Is It About War In Crimea Or MH370 Security Breach ? - 3/17/2014

Last week I wrote that I stayed alert for a possible collapse in this market and the collapse did come on last Monday when price gapped down below the top and middle band in one go. The MACD and DMI turned negative again on the same day while the Stochastic continues to deteriorate. Please take note that now the MACD is about to cross below its zero signal line and the Stochastic has already crossed below its 50's signal line, both signal lines are usually used to determine the bull/bear boundary. The D- has reached 37's which is confirming the strong strength of the sellers. The ADX has finally begun to rise which is indicating the beginning of a new cycle. But since it is still at 14's, I would want to monitor it for a few more days for a continuing trend. Since price is now below the bottom band, it is a confirmed bear market. I am placing my stop at the bottom band.

 
The weekly chart's indicators are giving a contradicting signal as the Stochastic is positive and rising but the MACD is falling again. The positive DMI continues to deteriorate with the D+ falling and the D- rising. This means the sellers are trying to overpower the buyers. The ADX has begun to fall again. Price has closed below the middle band which is the de facto 20 periods moving average. Though we do not yet have a confirmation from the Stochastic but I would regard this an initial sell signal. So if in the coming week with price going below last week low of 1795, then I would call it as a confirmed sell. Of course if price can close below the bottom band, it would be an added bonus.

I have remained extremely bearish biased for the past few months as there is a multiple bearish divergence formed at both the daily and weekly chart. A negative divergence merely reflect the dark hands have been trying to buy 5 but try to sell 50 without alarming the market and they will try their best to talk up the market with the helps from the market experts. But their actions is always reflected very clearly in the chart. Of course I would not say the market is guaranteed to collapse just because I see them there, but I would immediately get very cautious with the long positions which the right things to do are to reduce long positions and certainly not to add on to them and clean up all the bullish thinkings in my mind.

The current bear cycle, if successfully formed, should see the market goes to a minimum target of 1585.