KCPO:-  Experts' Views Can Be Hazardous -1/17/2011

The market took another beating last week by losing 81 points. The correction may not be over yet as the Stochastic and MACD continue their descent. The Stochastic has crossed down its 50's signal line which may hinting for more intense selling to follow soon. The gap between the MACD and its moving average is large, this is telling us the selling is still strong. The ADX continues to fall and so is the D+ which is now below the ADX, this confirmed the end of the prior bull moves.

The bottom Bollinger Band of 3,600 will now provide the next strong support. If that fails to hold, then it is almost guarantee many buyers will start to get panic and start their liquidations of long positions. Meanwhile place stop at 3730.

                    

Though the weekly chart has not flashed any sell signal, it has definitely weakened. The MACD is still positive but has begun to turn down its head. The Stochastic is negative and started falling toward its 80's signal line. I would monitor closely to see when if it will cross down. I also take note there is a series of bearish divergences formed at the Stochastic relative to the higher prices. I would not pay much attention to this kind of formation if it is found at the daily chart as the Stochastic is a sensitive indicator which may flash many signals too early. But if they are found at the weekly chart or monthly chart, I would place some importance to them. If this is played out accordingly , then I would expect the corrections to be more severe than that in the daily chart.

I would also keep an eye for a possible closing of below the upper Bollinger Band of 3590 as an initial sell signal.

As mentioned earlier, I often start to sit up and pay attention to any market when there is many "experts" start to get too overly bullish or bearish. But I would always start to look for evidence to point at the opposite direction. In the case of KCPO , when there were so many calls to buy and buy more  KCPO and palm oil counters, I more or less kind of expect the current correction will come soon. And I am making good money by betting on the opposite.