Tuesday, March 6, 2012

Market Overview 7th March 2012

 Wednesday, 7th March 2012. The FBM KLCI ended slightly unchanged yesterday as it was traded lower most of the time amid weakening performance on regional index. All major Asia indices are traded tad lower yesterday except Malaysia, another example of our "strong financial background". Other news to follow.

"- The Dow Jones Industrial Average DJIA -1.57%  closed down 203.66 points, or 1.6%, to 12,759.15, its worst percentage drop since Dec. 8 and the first time it’s lost more than 200 points since late November. The S&P 500 Index SPX -1.54%  sank 20.97 points, or 1.5%, to 1,343.36, its third straight session of losses and its worst day since Dec. 8. The Nasdaq Composite COMP -1.36%  lost 40.16 points, or 1.4%, to 2,910.32, also extending losses to a third day. It was the index’s worst percentage drop since Dec. 14."


 "- Asian shares fell sharply Tuesday, with steel makers among the top decliners, following global peers lower on growth concerns. Hong Kong’s Hang Seng Index HK:HSI -2.16%  lost 2.2%, the Shanghai Composite Index CN:000001 -1.41% fell 1.4%, and Japan’s Nikkei Stock Average JP:NIK -0.56%  ended 0.6% lower. South Korea’s Kospi KR:0100 -0.78%  dropped 0.8%, and Australia’s S&P/ASX 200 index AU:XJO -1.37%  closed with a 1.4% loss. U.S. shares had ended the day with small losses Monday, with investors taking their first chance to react to China’s cut to its 2012 growth estimate."

"-Crude futures on Tuesday ended at a two-week low, tracking a pullback for stocks, gold and other assets amid concerns about slowing global growth that included a warning about Greece’s debt crisis. Crude for April delivery CLJ2 +0.12%  lost $2.02, or 1.9%, to settle at $104.70 a barrel on the New York Mercantile Exchange. That was oil’s lowest settlement since Feb. 17 and the second day of declines in past three sessions."

"-US soybean prices end higher, rebounding after opening lower as optimism about export demand outweighs macro issues including a stronger US dollar and concerns about slower Chinese economic growth. Those concerns sparked a broader commodities sell-off. Markets still optimistic about Chinese soybean purchases from the US, with expectations for a smaller South American crop due to drought in Brazil. Price rise comes after a fall in soybean prices yesterday ended a two-week rally. CBOT May soybeans end up 10 1/4c at $13.35 1/4 a bushel. May soybean oil ends down 0.45c to 53.28c/lb. May soybean meal ends up $7.70 to $365.90 a short ton."

FKLI- Caution Ahead 

It would not be a smooth ride to breach above the all time high at 1,600 level, not that easy at least. We still have to navigate from the "not so good" news regionally. Yesterday, China officials have cut its growth forecast to 7.50%, 0.5% below 8% mark that is necessary for them to sustain employment and wages. Although it is just a forecast, market will take it seriously as China is the second largest economy, any news regarding their possible slow down are likely dampen Asia economy activity. International demand will be greatly affected and there is no telling how bad their economy slow down will slam Asia equity market. Back to our market, the March contract closed 10.50 points or 0.66% lower to 1,582.50, low of the day was 1,579. This was the first retracement after the index futures has rose for four sessions straight including this week. Interesting part was the Buyers easily give up and letting Bears win the battle effortless, most of the gain made on previous Monday was wipe out. Technically, this is the first move by the Bears and it could the beginning of market correction judging from Bearish engulfing candle formed on daily chart. Watch out for further correction as volume and open interest were recorded higher when the retracement begin yesterday. Conclusively, there is no major trend reversal spotted yet so far even though we are looking at some mild corrections on this uptrend. For today, support is located around 1,569 while resistance is pegged at 1,592 followed by 1,602.

Daily Pivot Point
R2= 1602
R1= 1592
S1= 1575
S2= 1569

 FCPO- Breaking The First Support Trend Line.

CPO futures continue to slide yesterday after it breached below the first support trend line around 3,250 on previous Monday. Palm oil futures is likely continue to track Soya oil weakness as it was traded below the 54 cents territory yesterday, the most active month was traded down about 0.075 cents to 53.65 cents per pound yesterday, around 5.45PM +8GMT. Most of commodities futures are also undergoing mild price correction after rising since last week and that include Gold, Silver, Wheat, Soya bean and crude oil. Same condition can be expected from palm oil futures as the Bulls need some breather after rising for the past four months with no major correction. Bears mean business now as the benchmark May did dropped to at least two weeks low yesterday. At close, the benchmark May losses about RM2 to 3,244, day low was 3,222 which happen to be weekly low as well. Technically, it is too early to tell whether this medium term uptrend has end as market corrections or vicious price adjustment are something typical to expect in any up-trending market. This corrections could turn out to be another higher low if the benchmark May manage to recovered extensively, usually after closing above second resistance value for the day (pivot points). For today, support is located around 3,200 while resistance is pegged at 3,263.    

Daily Pivot Point
R2= 3284
R1= 3263
S1= 3221
S2= 3200
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.

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