KLOFFE 10/2/09

KLOFFE:-

As at last week, intra day movement would had stopped your long positions out. This is quite a common occurrence when the ADX is below the 20's signifying a trend
less market as there will be many false moves. But we are still cautiously bullish biased on this market. Price has again managed to close above the middle Bollinger Band which is its 20 days moving average. But since the daily ADX continues to fall and gone below the 20 signal line, so we would be paying more attention to the Stochastic rather than the MACD which is a trending indicator. The Stochastic now has positively crossed up its 20 signal line which may be taken as an initial buying signal.

If this upside move can be maintained for a few more trading days ahead, we should see the MACD giving another new buy signal. We are willing to bet on additional long trades is because the MACD is near its zero signal line which its long signals are usually more reliable than those that are further away from this line. On top of this, we note that this new up move is supported by the weekly chart's Stochastic which has now crossed up its 50 signal line which by itself is another buy signal. Though the weekly MACD is also positive and rising, it is at -51 which we consider as "far" from its signal line which is telling us the current up move is just another technical rebound and not the beginning of a new bull cycle. You should also take note that the weekly ADX has already fallen which is confirming the prior bear cycle may has ended, at least temporarily.

If you have already entered the trade, then keep 870 as stops.