Market Overview 28th March 2012

Wednesday, 28th March 2012. The FBM KLCI rose in tandem with strong regional performance and better than expected positive performance from U.S market provide support for market recovery. Other news to follow.

"- U.S. stocks slid Tuesday as Wall Street offered muted reaction to the day’s economic data and took a break after the past months’ rally. Up 8% year-to-date, the Dow Jones Industrial Average DJIA -0.33% fell 43.90 points, or 0.3%, to 13,197.73. The S&P 500 SPX -0.28%  ended down 3.99 points, or 0.3%, to 1,412.52, with financials down the most and utilities the best performing of its 10 sectors.

The Nasdaq Composite COMP -0.07%  lost 2.22 points, or 0.1%, to 3,120.35."

 "-Japanese shares finished at their highest level in more than a year to lead a broad rally in Asia Tuesday after Federal Reserve Chairman Ben Bernanke signaled U.S. interest rates may remain at the current ultra-low levels. Spurred by strong overnight gains on Wall Street and a weaker yen, the Nikkei Stock Average JP:100000018 +2.36% ended at 10,255.15, jumping 2.4% from the previous day’s close for its biggest percentage gain in more than five months. Elsewhere, Hong Kong’s Hang Seng Index HK:HSI +1.83% gained 1.8% to 21,046.91, South Korea’s Kospi KR:0100 +1.02% climbed 1% to 2,039.76, Australia’s S&P/ASX 200 index AU:XJO +0.90%  added 0.9% to 4,301.30 and Taiwan’s Taiex XX:Y9999 +0.78%  advanced 0.8% to 8,029.46. Diverging from the regional trend, China’s Shanghai Composite CN:000001 -0.15%  fell 0.2% to 2,347.18. Data released Tuesday by China’s National Bureau of Statistics showed the nation’s largest industrial groups saw their net income drop 5.2% in the first two months of the year from the year-earlier period."

"-Crude futures ended a seesawing day modestly higher Tuesday, extending gains for a third day and notching a one-week high. Natural-gas futures settled at a 10-year low as investors braced for a supply increase later this week. Oil for May delivery CLK2 -0.42%  advanced 30 cents, or 0.3%, to end at $107.33 a barrel on the New York Mercantile Exchange. That’s the highest settlement since last Monday."

"-May Soybeans finished down 9 3/4 at 1369 3/4, 17 1/2 off the high and 1 up from the low.  May Soybean Oil finished down 0.33 at 55.1, 0.49 off the high and 0.09 up from the low.  The market saw some early buying support but the inability to take out yesterday's highs plus talk of the overbought condition of the market helped to spark a sell-off to moderately lower on the day into the mid-session. However, the active export pace and talk of the need to stay high to encourage soybean plantings helped to provide underlying support. A new high for the move in Malaysia palm oil prices overnight and a firm tone to China markets helped to support the market early and talk of South America declining production added to the positive tone. However, the COT report on Friday showed a record high net long position from fund traders and this may have sparked some long liquidation selling ahead of the key USDA reports for Friday morning. On the rally yesterday, open interest jumped 17,382 contracts to 679,157 which is a new 13-month high. Private exporters reported a sale of 120,000 tonnes of US soybeans to China for the 2012/13 season. The new high for the move and lower close (reversal) for May meal could be seen as a sign of a near-term top."

FKLI- Should We Be Cautious ?

 The stock index and index future manage to closed at the high yesterday amid positive equity index performance from regional index that rose over 1% except Shanghai Stock index (SSE). The swift recovery from regional index was likely getting the boost from overnight U.S market performance but unfortunately that reason alone only help our equity index to inches up 0.3% to 0.5% for index futures. Most might have agreed that correlation in any market is a terrible aspect to consider when it comes to trading because it is out trader's scope to identify when will the market correlate and how much it will correlate. But in long term, most of the major market tends to correlate, one way or another. Technically, the recovery for index futures and stock index somehow slow down when it approaching previous major resistance. It would not appear to be a swift recovery or break out as mentioned from previous post where I mentioned market is likely fully charged when it approach major resistance level. Nonetheless, there is yet any sign of correction or Bears influence form here yet, market is likely taking its own sweet time to climb. For today, support for Apr contract is likely located around 1,587 while resistance is pegged at 1,596~1,601 level.

Daily Pivot Point
R2= 1596
R1= 1594
S1= 1589
S2= 1587

 FCPO- Another Rally

CPO futures continue to recovered yesterday with some help from Soya oil and re-new follow thru buying activities on the afternoon session. New high were made on yesterday rally and this signifies that Bulls are still eager to Buy even when the price have rose to at least 11-months high currently. The most actively traded Soya oil futures rose 0.1350 cents to 55.56 cents per pound on 5.50PM +8 GMT. With more series of higher lows and higher highs formed on daily plus weekly chart, this is one vicious Bulls force to be reckon with. As long as there is no major correction, most investors and traders re-action will be going Long on most of the weakness. Technically, smaller time frame chart are forming wonderful Bullish formation so far and of course it is not a smooth upside sailing as there as a few tricky session that hint for major correction but the Bulls fought back and push the market back to its former track. For traders who have Long previously, you may look at smaller time frame to detect any early sign of weakness while for trader who prefer to counter trend, you may use the smaller time frame and time your entry but without holding your positions overnight. The benchmark June came close to breach yesterday resistance level around 3,505 level but unable to do so as it might be temporarily exhausted from rallying for two session straight. For today, support level is likely located around 3,455 while resistance is pegged at 3,502 followed by 3,523. 

Daily Pivot Point
R2=3523
R1=3502
S1=3455
S2=3429

Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.