KCPO - A Temporary Bottom ? A Possible Technical Rebound ? - 10/8/2012

The market now "officially" gone oversold. The ADX is now above both the D- and D+. This is the better way to determine an overbought or oversold mode in a strongly trending market. So I would take my profit at the market . I think this is merely a temporary bottom and after such a strong sell down, the market may even stage a technical rebound from here.

I would buy when if price close above the bottom band with the Stochastic crossing up its 20's signal line. I would have to be very careful doing this because the MACD is still negative with its "mouth" (the space between the MACD and its moving average) is still big and it is far below  its zero signal line. Trade smallish contracts and keep stop tight at prior 2 days low minus 2-3 points. I use prior 2 days instead of the usual prior 1 day is because during this kind of reversal market, the market usually goes extreme violent at times, so I am keeping the stop a bit further to avoid been shook off.


The weekly chart is a still full sell  mode. The Stochastic , MACD and DMI are negative.The ADX keeps rising confirming the strong trend. But prices are way below the bottom band, sometime when price gets "too far" from the band, it tends to do some minor retracement. This may be the case now as the daily chart seems to be pointing for a possible technical rebound.



I was supposed to comment a bit on the monthly chart last week as it was the final week on September but I forgot. So I am doing it this week. In the monthly chart, you should ignore the last Japanese Candlestick as it is representing what has happened during October. The monthly chart bottom band had been providing a support for prices for the 3 months but prices finally crashed through that support last month. And what a breakdown ! A 473 points losses ! The monthly chart seems to telling us the bears ae still around. Both the MACD and Stochastic are still falling; DMI is negative. So I would not be surprise if we see further selling across the horizon.

Last week the fundamentals "experts" suddenly woke up to the grand slamdowns and start telling investors to dump their plantation shares. Their calling reminds me of the Warren Buffett's misadventure in his US Dollars speculations during the early 2008. Buffett got convinced by all the bearish stories going around during that time of how the US Dollars will soon become worthless. He sold a sizable contracts in the market only to see US Dollars staged its recent bull rally in recent years. But Buffett held on to his losing positions until he felf he can no longer tolerate it. So he closed off all his shorts positions with sizable losses. Only just in time to see the US Dollar going down again. The moral of this story is that fundamental analysis fails to get their time factor correctly most of the times. Same just happened at our CPO market.