Thursday, June 28, 2012

Market Overview 29th June 2012

Friday, 29th June. Local stock index retrace quite substantially yesterday amid choppy and weaker trading session on regional session. Other news to follow.

"-U.S. stocks closed with mild losses Thursday as speculation of a breakthrough in Europe’s efforts to resolve its debt crisis fueled a late-session recovery. Reports shortly after the market close had European Union leaders agreeing to spend 120 billion euros to stimulate growth and create jobs. After falling 177 points, the Dow Jones Industrial Average DJIA -0.20%  fell 24.75 points, or 0.2%, to 12,602.26, with J.P. Morgan Chase & Co. JPM -2.45%  off 2.5% on a New York Times report that its trading losses could top $9 billion. The S&P 500 SPX -0.21%   shed 2.81 points, or 0.2%, to 1,329.04, with technology hit the hardest among its 10 sectors, all of which were in the red. The Nasdaq Composite COMP -0.90%  fell 25.83 points, or 0.9%, to 2,849.49."

"-Asian stocks traded flat to modestly higher Thursday, with a Japanese stock rally the exception, as early gains moderated ahead of a crucial European Union summit. Japan’s Nikkei Stock Average JP:100000018 +1.65%  climbed 1.5% to outperform the region, while Hong Kong’s Hang Seng Index HK:HSI -0.79%  rose 0.3%. Australia’s S&P/ASX 200 index AU:XJO +0.04%  and South Korea’s Kospi KR:SEU +0.08% both advanced 0.1%. The Shanghai Composite Index CN:000001 -0.95%  , however, dipped 0.2%. Early broad Asian share gains followed a solid performance from U.S. stocks on Wednesday, after a trade group’s index of pending home sales rose 5.9% in May to a two-year high and the U.S. government reported orders for long-lasting goods bounced back in May."

"-August Soybeans finished down 8 3/4 at 1447 1/4, 17 3/4 off the high and 8 1/2 up from the low. November Soybeans closed down 9 at 1403. This was 10 1/4 up from the low and 19 1/2 off the high. August Soymeal closed down 2.4 at 421.3. This was 0.8 up from the low and 8.1 off the high. August Soybean Oil finished down 0.45 at 51.09, 0.63 off the high and 0.32 up from the low. November soybeans closed lower for the third session in a row. August soybean meal traded moderately higher early and was unchanged coming into the close. August soybean oil was weaker throughout the day to close near it's session lows. Outside markets turned negative midday after President Obama's healthcare package was upheld in the Supreme Court. Considering the long fund position in the soybean market, outside market pressure likely triggered some profit taking in the soybean market. Afternoon weather maps continue to show rainfall in the 1 to 3 day forecast for Iowa, northern Illinois, northern Indiana, and Ohio. Changes vs. the morning maps include showers reaching farther south with heavier rainfall to the north. The USDA reported that private exporters sold 110,000 tonnes of soybeans to an unknown destination for the 2012/13 marketing year. The steady sales pace of new crop soybeans continues to provide a positive market sentiment to the trade going forward. Weekly exports sales were considered neutral with 403,900 metric tonnes for the current marketing year and 389,200 for the next marketing year for a total of 793,100. Cumulative soybean sales stand at 102.8% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 99.2%. Net meal sales came in at 229,600 metric tonnes for the current marketing year and 31,600 for the next marketing year for a total of 261,200. Old crop sales of 61,000 metric tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 8,300 metric tonnes for the current marketing year and 5,200 for the next marketing year for a total of 13,500. Sales of 4,000 metric tonnes are needed each week to reach the USDA forecast. The USDA will release its Grain Stocks and Planting Intentions report tomorrow morning. Heading into the report, traders are keying off the soybean planted acreage report. Many will quickly believe that the USDA will be too high as parts of the Midwest will not be able to double crop soybeans over harvested wheat due to topsoil dryness. Traders are penciling in an increase of 1.6 million acres from the March estimate of 73.9 million acres."

FKLI- First Sign Of Weakness


Stock index and index futures made some correction yesterday along with the long anticipated listing on Felda Global Ventures yesterday. However, the shares was traded 16.48% higher to RM5.30 at the end of closing bell. On bigger picture, the FBM KLCI went down about 7.65 points to 1,594.24 level while July contract slide about 13.50 points to 1,594.50 level which might due to lack of positive development ahead of EU summit. Investors are likely stay on sideline awaiting the meeting outcome on EU summit before placing their bets again. Technically, the index futures has shown the first sign of weakness after it failed to breach previous high around 1,610~ 1,615 level after testing it for two sessions this week. Market is likely paving way for further correction as the slope Exponential moving Average have turn from positive to negative at the moment. Apart from that, lower high candle formation was also visible on hourly chart shown above, this pattern or formation is typical found on all Bearish market. By using controversial correlation, the opening session will be effected by overnight U.S stock index performance. For today, support is likely located 1,584 while resistance is pegged at 1,616.

Daily Pivot Point
R2= 1624
R1= 1616
S1= 1596
S2= 1584

FCPO- Supported At The Moment

CPO futures went down again yesterday as investors start to cover their Long position ahead of EU summit. Investors were too concern about the outcome of the EU meeting that currently does not look that well as there is no commitment or talks that target to resolve their debt crisis directly. Worse off, there might not be any agreement met at all after the summit. On Bursa Derivative closing bell, the benchmark Sept shed about RM18 to 2,998 while Soy oil went down about 0.22 cents to 51.31 cents per pound. Technically, the Bearish momentum on short term time frame should come to temporary pause at the moment as the market manage to rebound after it hit the support trend line shown above. Mean while on medium term perspective, market is still hovering on sideways direction within the range of 2,980~3,060 and these range were derived from support and resistance trend line. Even though there is a brief breach below the support trend line at 2,980 yesterday, market manage to recover soon after that as Short holder cover their positions thus prompting for profit taking. Market is expected to be very choppy today ahead of major market event on the EU summit. Nonetheless, watch out for further market correction of the market manage to breach below today first pivot support level around 2,980~2,975.

P/S: Market is likely gap down today judging on weaker than expected overnight performance on Soy oil. The most active month for Soy oil contract dipped about 0.45 cents to settle lower at 51.09 cents per pound.

Daily Pivot Point
R2= 3048
R1= 3023
S1= 2975
S2= 2952

 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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