KCPO:- It Is Still Confusing -10/11/2010

 

  

When this market opened last Monday, it immediately gaped down and took out my stop. But then it did not follow up the sell signal the following day. Instead it flashed another buy signal on Wednesday when it closed above the upper Bollinger Band confirmed by a positive Stochastic. On Thursday it even managed to close above its recent tripe tops which is suppose to be very bullish.

And now comes the difficult part:- Friday price action was a black candlestick and the Stochastic crossed down with  forming a minor bearish divergence. It certainly does not look too encouraging here. BUT, last Friday at the US commodities market, the whole soy complex opened limit up even though the USD did not fall too much. So on the coming week, would KCPO follows its US cousins and go limit up too ? I am at a loss too as the indicator does not predict so. So I would just keep a stop at 2737 or higher to protect my profit. And I would advocate to you to keep your trading volume small as extreme market volatility may be a sign of end of the prior cycle.

The weekly chart remains bullish as both the Stochastic and MACD continues to rise, prices stay above the upper Bollinger Band and the ADX continues to rise and may be crossing above its 20 signal line.

For the moment, I think the best strategy may be to take profit whenever possible and wait for another 1-2 weeks to see what may be developing across the horizon.