ZLBT Chats

Tuesday, June 26, 2012

FKLI >>> Resilient Until When?

You may get Hammered
Against All Odds
While other global markets had been tanking for the past week, both the FBMKLCI & FKLI is not only resilient but recorded new highs as well today. The FBMKLCI added on 0.50 points to closed at 1603.12 after retracing from a 1611.50 new high. This is against the global flow. The FKLI, however, fell 3 points to 1603.00 after breaking all resistances to logged in a new 1615.50 high before profit takings kicks in. The retracement closed with a negative Inverted Hammer (IH). This is an early warning alert since the IH is formed at the peak of a rising trend. Technically, both the FBMKLCI & FKLI daily chart indicators have not displayed any obvious sell signals ..... yet.

More Than One Way To Skin A Cat
Since the Index Futures opens earlier and closed later than the cash market, it can be considered a prelude to the main Composite Index. Pre-emptive FKLI queuing can be noticed 5 minutes before the cash market open or closes. And similar sentiments usually continues the morning after. To gain the extra yard advantage over the rest, some innovations will be most helpful but risky, nevertheless.

The Alternative MACD Application
Most trading softwares have conventional MACD 12, 26, 12 as default operating standard procedures as with most other attributes. The usual suspects are RSI 14-days, Bollinger Bands 20/2, Stochastics 14, 3, 3 so on & so forth. These parameters are, however, not concreted otherwise softwares designers will not offer check box changes, will they? Since technicals are all but subjective, random changes can be very advantageous when knowledgeably applied. Technical newbies are warned to apply such changes with utmost caution.

In ZLBT, my recommendation for such an experimental endeavour is to try using MACD 6,12,6 as an alternative for the MACD 12,26,12 default. Sensivity is the keyword here so it is less useful when applied to longer timeframe charts such as weekly, monthly or yearly charts. But when applied to Daily, hourly, 30 mins, 15 mins or 5 mins chart, it can be awesome and to an extend, too hot to handle for some especially newbies. The danger of using MACD 6,12,6 are the whiplashes >>> the shorter the timeframe used (like 5 mins) the greater the kick backs. Alternative MACD 6,12,6 is more then 50% less than MACD 12,26,12 so the whiplash can be expected to be TWICE or TRIPLY fast. Applicants get ready for no surprises >>> FASTEN YOUR SEAT BELTS. The same principle applies for all other adjusted indicators & oscillators.

ZL have included the FKLI Spot Daily Chart c/w MACD 6,12,6 for your perusal. As shown in chart above, the bearish divergence is a good enough reason to anticipate a reversal anyday. Not a question of IF but WHEN. ZL lost a few points last Friday with a failed short attempt but is confident enough to recoup those minor losses this time around. I am in 1612.00 Short >>> Monday morning entry. Subjectiveness equates to rights & wrongs. A decent stoploss should limit the damages when prices goes against your entry. ZL admit being wrong last Friday when the FKLI rose against the Spinning Top (ST) but if I am correct with today's Inverted Hammer prognosis, I will not be yards but miles ahead of the crowd :)


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