KCPO:- It Is Buy Again But Writing Is On The Wall -2/8/2011

 

The massive flood in the south seems to trigger panic buying. The Stochastic continues to rise and now is breaking above 50's signal line. The MACD has also turned positive . Price surged above the upper Bollinger Band with the ADX pointing up again. All these are confirming a buy.

Even though the overall big picture remains extreme bearish with the presence of the bearish divergence, I would take a long trade but maintain a tighter stop if thing reverses abruptly. Place stop at 3810 for now, but I would amend the next daily stop higher (eg. yesterday low minus 3 points)

 

 
The weekly chart remains bullish as the MACD has resumed hooking up again. The Stochastic remains above its 80's signal line while prices stay above the upper Bollinger Band, so there are no selling signals . The only thing to watch out for is the ADX which is now clearly above both the D+ and D-, this is a classic sign of an overbought market. Or course this remains as a warning signal which mean you should be careful but not to react to it yet.

It would be interesting to watch how far further will this market goes in the near term as the weekly's ADX is flashing a warning.