KCPO:- A Temporary Bottom Reached ? -2/28/2011

 

Last week the "shock and awe" kind of selling came just as I predicted. I do not think we have seen the end of it yet, but the market may has just reached a temporary bottom here as last week low was almost hit the 38.2% retracement level. You should take at least some of the profit off the table . Place stop at 3602.

The MACD remains negative and below its zero signal line which is confirming the bear cycle. The Stochastic has reached below 20's and seem to be turning. I would not take this as a buy signal yet. The ADX has begun to rise which is telling us that a trend is still intact.

There is a possibility that the market may recover back to 3565 and 3650 before collapsing again. I will take previous day low minus 3-5 points as new signal to sell again.

              


The weekly chart's MACD has finally crossed down but the Stochastic is still maintaining above its 80's signal line. Prices has crossed down the middle Bollinger Band which is the 20 periods moving average, but it was able to close back above there. So this week I would look for (1) the Stochastic to cross below its 80's and (2) price closes below the middle band. With these 2 conditions fulfilled, it would a solid sell signal. 

Many  markets have turned extremely volatile under the excuse of the current geo-political problem . But this kind of volatility  usually occur when market is approaching their major terminal points. So you may want to start doing your homework to determine your next course of action.