KCPO - Let's Swing Back To Buy Mode - 5/28/2012

Ok, now I would call this market as "oversold" because the ADX has climbed above the DMI and has begun to turned flat. This is the ultimate sign of an oversold market, but of course there is no guarantee that the market will  resume selling again. But as far as indicator is concerned, this is a good enough confirmation that a temporary bottom is there. I have closed off my shorts positions as price went back above the lower band on last Friday. And I will start buying longs on the coming Monday when if price goes above 3151. I have already got a positive Stochastic but it is still below its 20's level, I would much prefer to see a Stochastic of above 20's for a buy. Meanwhile the MACD has begun to hook up but it remains negative.

When if after I have engaged in a new longs position, I would initially place a stop at its prior day low minus some as my stop. If prices can continue to go up, you can either use the prior day low minus as stop or you can use the last band level (low, middle or top) minus some as the new stop. Its selection all depend on your risk appetite and capital size.

 

The weekly chart's indicators of Stochastic and MACD  continue to stay negative and falling. The DMI may has stopped expanding but neither it has begun to contract. Price is unable to close back up above the bottom band. So all these add up as "sell"

At this moment, as the weekly chart still in a sell mode, I have to be careful on the daily buy signal and treat it as a technical rebound before another sell cycle kicks in again. Nevertheless, I will take this swing at the daily chart and hope it can turn out to be a profitable trade.