FKLI - Market Could Collapse - 9/15/2014

Last Tuesday flashed a new buy signal as price closed above the top band but I was not in any hurry to enter a new position. I wanted to filter that signal with a following day price that is higher than the signal day high. It did not come as price begin to go back lower again.  Then on last Friday, price went below the bottom band with both the Stochastic and MACD turned negative. I would sell on the coming Monday if price can go lower Friday's low of 1848.50. The current sell signal is a little different from the last one as the D- has crossed above the 30's signal line. This usually mean there is an additional power to the selling. Another additional "strength" to the current sell signal is that the Stochastic is crossing below its 50's signal line as it done on 5/9, this time the price has actually gone lower than the last time of 1849.50. The final item to watch out for would be the ADX which has turned flat. The "flatness" could mean that a new cycle may begin next.

But as the ADX is still below the 20's signal line, so we could see more listless market coming forth. 


 

The weekly chart has turned more bearish biased as price has closed below the bottom band. The MACD continues to fall and it is getting closer to crossing down the zero signal line. The Stochastic has turned positive and rising toward the 20's signal line. The contradicting MACD and Stochastic is telling us the market is still caught in a listless mode. So is the DMI which is below its 20's signal line. The falling ADX which has now reached 14's are adding more weight to the listless reading.  Be careful for price may just collapse below its recent low of 1832. If that level fails to hold, then it could signal the beginning of the end for this market.

I continue to place more merits to any new sell signals over a buy signal because of the bearish divergences.