CPO -11/5/09 - End of the bull ?

Last week I mentioned there is contradictions between the daily and the weekly chart. I also noted in the daily chart a flat ADX may be taken as a sign that the prior trend may has ended. Even though last Monday, price broke high but it was unable to follow through for the remaining of the week. The new high caused the MACD to go back to positive territory again but since there was no follow throughs, the MACD has started to fall again and we may see another bearish cross down again.

I am getting increasing cautious about this market since 1) it had already hit its higher upside target of 2,800 and 2) prices hitting new highs but both the Stochastic and the MACD have failed to follow suit with higher peaks. Instead the Stochastic has formed 3 lower peaks while the MACD may be forming the 2nd lower peak soon. This divergence usually warning us that the market is losing steam and it may collapse soon. Since we also have a flat ADX which is above both the D+ and D- which is usually a reliable overbought signal.


In the weekly chart, the first thing that jumps into my attention would be its spinning top candlestick which is a small real body (little price action between its open and close). During a bull rally or near a significant high, a spinning top means the rally is losing momentum and can be interpreted as the bull could be in trouble. BUT since price remains above the Bollinger Band and the MACD, Stochastic and the ADX continue to rise, so I cannot say that this bull is finished at this stage of time.

Summary:- the weekly chart still has no sign that the bull is finished but the daily chart is getting more bothersome, so I will place a stop at 2629 to protect profit in case the market collapses. But since crude oil rallied last Friday, I would not too surprise if CPO shot to the next upside target of 2830 before correcting.