Wednesday, November 28, 2012

FKLI - Potential Reversal Signal (Nov 28)

Hi all.

In my previous post, I mentioned the reversal is near, & we shall wait for some candlestick reversal pattern to gives us the confirmation to ride the rebound.

After days of wash & rinse, finally, today we see a close in Bullish Engulfing candle. Indicators hooking up from oversold region & volume spike supported the bullishness of the day.

However, there's a risk of this being a part of a 3-candle-formation called the Bearish Three-line Strike. Although candlestick theory suggests it to be bearish continuation pattern, some experts back-test studies had show that it practically act more as a bullish reversal signal, instead.

Hence, the more defensive LONG can wait for a higher close tomorrow as a confirmation for the bullish reversal. A higher close tomorrow may gives us another bullish candlestick pattern called the Three Outside Up. That will be what I call a 'double-confirmation'... :D

The three patterns mentioned above:

Candlestick Patterns - Bullish Engulfing, Bearish Three-line Strike, & Three Outside Up (Nov28)

Technical analysis is a study based on historical data.
Assuming we find bottom at 1,590, the bull run, from 1,300 (Sept'11) to the recent peak of 1,678 (Oct'12), will still be valid. On FKLI, almost all correction in a primary uptrend had ended with either a hammer, or a bullish engulfing candle. 
I'm actually quite comfortable going long just based on the bullish engulfing candle today. 

That said, my wave count on FKLI, stating the potential end of a [5](5) primary wave, might still not be confirmed yet.  Not until we see a failed test of the previous peaks of: 1,650 | 1,660 | 1,678, & subsequent break below 1,590 level.

Here's a view from the 1,300 bottom to date:

Bull Run from 1,300-1,678 (Sept'11-Oct'12)

Given that December is almost always a bullish month, with its famous year-end rally, window-dressing, & with the GE still to come, I'm keeping a bullish stance on the FKLI in the coming month. 
Hence, I'll take today's close as the potential start of the bullishness to Dec'12.

If the reversal proves valid tomorrow, we will see a rebound of about 50points magnitude, based on the long-term channel supporting the 1-year bull run. End target at about 1,640-50.
However, I'm skeptical about a 1,700 peak by year-end, given the deep correction we just had. Even a retest of the 1,678 peak will be a surprise for me, seeing that there's only roughly 20+ trading days remaining. 

My near-term (Dec'12) outlook on FKLI:

FKLI - Dec'12 Outlook (Nov 28)

Embrace X'mas & New Year 2013 with some good profit in-hand! :)
Happy Hunting everyone!

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