KCPO -  Market Hibernates Again - 1/21/2013


 

If you had placed your stop at the middle band or my 2435, either way you would still got stopped out on last Wednesday. Such is the peril of a trendless market as confirmed by the falling and lowly ADX.  The Stochastic has turned positive but MACD remains negative, contradicting each other; The DMI has begun to wrigger like a worm; Price is also getting stuck within the bands. All these are confirming a sideway market.

I would only engage new trade when price break above the top band or below the bottom band with a confirming Stochastic. Otherwise I would prefer to stand aside and watch. As the MACD is still above its zero signal line and with the previously formed triple bottoms and a bullish divergence setup, the buy side should be more significant than the sell side. And if we look back to the historic chart of KCPO, it usually would sideway for a period of time before breaking up and down in an extremely shock and awe manner.

 

The weekly chart's Stochastic and MACD are both positive and rising. But the DMI remains negative with the ADX lying flat for the last 3 weeks. Even he Bollinger Band has begun to tighten. I would watch the middle band breakup for a new buy signal. If price goes below the bottom band, I would need a negative Stochastic before I sell again.

Both the daily and weekly charts, it seems the market is digging in for another hibernation. It would be difficult to make money from position trading. You should go trade the 30 minutes chart if you have access to realtime data feed.