KCPO:- To Be Bearish Biased Is Prudent ? 10/5/2010

I cautioned about the prior up cycle will be a short one because of the low ADX. And true as it turned out, the market broke down again on last Tuesday. Since I told you to take profit on previous day low, that would had got you safely. Again this market does not offer a clear sign of its next course of action as the Stochastic has already turned negative but the MACD remains positive. Prices went up and down and basically stay within the Bollinger Band. Strange to note is that the ADX has begun to rise and crossed above the falling D+ which is usually a great sell signal. But since the other 2 indicator and price action do not yet confirm a clear sell signal, so I would wait for a few more days. I would look for the MACD to cross down before I start selling. By then if you have sold, place stop at 2527.



The weekly chart Bollinger Band continues to tighten and so is the ADX which is still falling, both are confirming there is no trend in this market. But as before, these are also classic signs of a major violent move ahead. Both the Stochastic and MACD are negative, the Stochastic is below its 50's signal line while the MACD is fast approaching its zero signal line. Watch for a weekly closing (coming Friday's closing) of below the bottom Bolliner Band of 2495. A solid sell signal would be in place.

As I have mentioned sometime back, I cannot seem to be able to make out what this market is going to do next. But with the indicators turning negative and most commodities falling in prices recently and the presence of an imperfect double tops, I would think to be more bearish biased would be more prudent.