KCPO - More Whipsaws That Break Traders' Heart- 3/18/2013

 

Again the market played the nasty game of drifting and hit my stop at 2365. This is one of those painful moments when the market gets listless and bounce around here and there and triggering new trades but hitting our stops soon after that. The ADX continues to fall, it has now reached 16's.

Price went below the bottom band with the Stochastic crossed down on last Thursday. But the signal was not confirmed the next day as price did not go below the signal day's low but instead it went back up and closed above the bottom band. But this time the Stochastic has not yet complimented this buy signal. So on both ocassions, there is no new trade engaged.

So what should be my next course of action ? When I know that the market is "dead" (ADX  falling and below the 20's etc), I can either stop trading and stand aside to wait for a more concrete signal to appear. Or I can stick onto my trading plan to trade on the next signal. But with that I would have to tolerate more minor losses before I can reap good profit from the next trending signal. There is unfortunately no gospel answer to that dilemma. It all come down to the trader's own individual personality, I always consider myself to be "brave", so in the current situation, I would buy again in the coming week when I can get a complimentary confirmation from the Stochastic. And I think the market is getting some support at the 2366 level.

All the indicators are negative but the Stochastic and MACD seem to turning up. The DMI's gap between the D- and D+ is also looking like it is closing up. Of course none of them is confirmed yet. The most unpleasant item here is the ADX, it has begun to fall again. It has reached 16's now. A sign that this is a "difficult" market.

 

The weekly chart is a classic case of a listless market. The 
 Stochastic is falling but the MACD continues to rise. They contradicting each other. The Bollinger Band continues to "squeeze" with prices caught inside the band, this is another confirmation that this is a "dead" market. ADX remains flat at above the DMI = no trend but prior bear cycle may has ended.

Though there is no clear direction in this market yet, but the "squeezing" Bollinger Band is bringing much excitment to me as this is telling me that an explosive and violent move should be on the way. All I have to do is try to interlligently guess which way the market may blow.

A clearer picture would emerge when if the market can close above 2467 or below 2367.