CPO - The wrath of the bears - 13/7/09

Nothing in the daily chart suggest the bears are finished with their trashing down of this market. The MACD is still falling and price remains below the lower Bollinger Band. Though the Stochastic may be below the 20's which many will claim it is oversold. As I have explained here before - once the ADX is rising above the 30's, then we should watch the ADX as a more reliable overbought/oversold signal An "oversold" Stochastic can remain oversold for weeks and price will continue to fall to new lows. Such is the intrinsic weakness of the oscillators indicators in a strongly trending situation. Since the ADX is still below the D- and still continue to rise, I cannot say that this market is oversold yet. But as a compulsory part of our trading, you should just place a stop at 2105.


The weekly chart finally flashes its significant selling signal which is price has closed below the lower Bollinger Band which is a very solid confirmation of the bear is the overlord now. The next major confirmation would be to watch out when the MACD crosses down below its zero signal line.

CPO's next near term downside target should be 1,900. The more intermediate term target would be 1,570.