CPO - The beginning of the end ? 7/9/09

Last week I was mentioning " up to something big soon" in this market. CPOt suddenly collapse on last Tuesday. Price closed below the lower Bollinger Band which would triggered some initial shorts position. Since I was talking about a falling ADX in both the daily and weekly chart, you would NOT want to commit some big position until you see some more evidence that the bear is back.

The Stochastic is now complimenting the MACD which both have turned negative and falling. And you should pay attention to the MACD which has broken down below its zero signal line which is more bearish signal. Another major development would be the ADX has begun to rise and it has crossed over the falling D+ which by itself is another major sell signal. With these, you may want to add on to your shorts position. Place a stop at 2276.


The weekly chart is not as well pronounced as the daily chart's bear as the ADX is still falling. The MACD is still negative and has turned downward again. But the Stochastic remains positive. Price still maintain inside the Bollinger Band. All these contradicting signals are telling us that this market is still caught in a range bound situation. So by the coming week, in order to confirm the bear in the daily chart, we would need to see:- 1) price goes below the lower Bollinger Band which is at 2180; 2) MACD to cross down its zero signal line; 3) A rising D- taking out prior D- peak (as marked out in the chart) and 4) A rising or flat ADX indicating the prior sideway market has ended.

I have not been too bullish about this market since it hit most of its upside targets. Before the prior bull rally , I can only detect a minor bullish divergence at its daily chart but not in its weekly chart's. So I only take the rally as a technical rebound in an extremely oversold market and NOT a major reversal in the overall cycle.

As the current fashionable market thinkings and talking are about how the impending collapse of the USD will spur another major commodity bull rally. But I beg to differ on this much held views, from the USD chart, I think it may be laying the ground work to stage a super bull rally soon. At the same time, I have noticed there are bearish divergence to be found at many of commodities charts. This is complimenting my bullish reading on the USD chart. If I am right, then CPO should follow its "cousins", especially crude oil to have a great fall soon. To see CPO retesting 1,900 and then going to 1,650 would not surprise me a bit.