Sunday, June 3, 2012

Market Overview 4th June 2012

Monday, 4th June 2012. The FBM KLCI stopped earning streak when it closed lower on previous Friday amid resurface concern over Euro debt crisis. Other news to follow.

"-U.S. stocks started the new month with more than 2% losses Friday, turning the Dow Industrials negative for the year and pushing the S&P 500 into correction territory, after a U.S. jobs report showed slim growth in May. The report, following downbeat data from China and Europe, raised serious concerns about the health of the global economy and sent investors running into Treasurys and gold. The Dow Jones Industrial AverageDJIA -2.22% fell 274.88 points, or 2.2%, to 12,118.57, its worst day since Nov. 9. The index is down 2.7% for the week and 0.8% for the year.

The S&P 500 Index SPX -2.46% dropped 32.29 points, or 2.5%, to 1,278.04, undercutting what some analysts see as support at 1,280, and also its worst day in more than six months. The Nasdaq Composite Index COMP -2.82% declined 79.86 points, or 2.8%, to 2,747.48, also in a correction.

"-Most Asian markets declined on Friday as downbeat Chinese manufacturing data sparked worries about the global growth outlook, with Japanese stocks also hit as a strong yen pressured exporters. Japan’s Nikkei Stock Average JP:100000018 -1.20%  fell 1.2%, while South Korea’s KospiKR:SEU -0.49%  dropped 0.5% and Australia’s S&P/ASX 200 index AU:XJO -0.30%  slipped 0.3%. In China, Hong Kong’s Hang Seng Index HK:HSI -0.38%  lost 0.4%, while the Shanghai Composite CN:000001 +0.05%  rose fractionally. The losses came after China’s official version of the manufacturing Purchasing Managers’ Index (PMI) declined to 50.4 in May, from 53.3 in April, well below forecasts. A separate PMI reading from HSBC fell to 48.4 in May, compared to April’s 49.3. "

"-July Soybeans finished up 3 at 1343, 15 off the high and 25 1/2 up from the low. November Soybeans closed down 11 1/2 at 1258 3/4. This was 13 3/4 up from the low and 19 off the high. July Soymeal closed up 1.8 at 396.3. This was 8.5 up from the low and 8.0 off the high. July Soybean Oil finished down 0.5 at 48.7, 0.78 off the high and 0.37 up from the low. Bull spreads were active today, supporting the nearby contract. July soybeans saw a dramatic, 40-cent turn higher by midsession after trading sharply lower early. The lows occurred right near the US Employment and the weekly Export Sales reports. A collapse in the stock market and weak economic news for China and Europe overnight plus poor employment news in the US helped to drive the market lower. However, a somewhat threatening weather outlook for the US, a turn sharply higher in gold and a spike top move in the US dollar lent some support. A 50% correction of the December to May rally had left technical support 1319 and a turn higher from this level this morning may have helped support the buying. Soybean export sales for the week ending May 24 came in at 240,700 metric tonnes for the current marketing year and 178,000 for the next marketing year for a total of 418,700, which was below trade expectations. Cumulative soybean sales stand at 101.0% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 97.9%. The report showed meal with net sales of 33,200 metric tonnes for the current marketing year and cancellations of 4,100 for the next marketing year for an overall net of 29,100. Sales of 80,000 metric tonnes are needed each week to reach the USDA forecast. Oil sales came in at 12,700 metric tonnes for the current marketing year and 5,000 for the next marketing year for a total of 17,700. Cumulative soybean oil sales stand at 80.2% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 70.8%. Sales of 6,000 metric tonnes are needed each week to reach the USDA forecast."

FKLI- Some Retracement, Nothing To Worry About  ? 

The stock index and index futures  closed lower on previous Friday as investors grew wary about the possible outcome if Greece is force out from the Euro zone. The fund needed or bail out will be speculate in nightmare proportion. On previous Fridaym, the FBM KLCI retrace about 7.08 points to 1,573.59 while June contract went down about 10.50 points to 1,570. Now we have some unpleasant economy data from China which directly pointing to upcoming slow growth on manufacturing activities and job market as well. Technically, market is retracing due to profit taking recently after it rallies swiftly up to 1,582 level. The Bulls definitely need some breather. For today, market is poised to open lower and continue to retrace due to weaker than expected stock index performance from Euro and U.S market. My initial assessment for major support level will be located around 1,560 based on previous horizontal trend line. If the market does rallies after retracing from the low (rebound from the support level, hopefully), price actions from hourly chart is likely create another higher lows.

Daily Pivot Point
R2= 1581
R1= 1575
S1= 1566

FCPO- Bears Strike Again

CPO futures continue its Sell-off streak amid recent weakness on commodities prices. All commodities known to be traded in the market is now affected. Not only that, we cannot even anticipate where is the bottom on this down trend. On previous Friday, the benchmark Aug closed RM95 lower to 3,006, day high and day low were 3,076 ~ 3,002 respectively. It seems that palm oil market is likely getting more beating from the weak commodities prices and there is nothing we can do to stop this Sell-off. The forces of supply and demand will determine where is the general market direction, while greed and fear will shape short to medium price volatility. Technically, the gains made early last week has been wipe off on the same week when the market dipped to 3,002 level. Bulls task to revive the price recovery will be impossible as investors are still haunted with record high palm oil stocks level and sluggish demand that seems refuse to pick up. Fundamentalist are still Bearish for commodity prices due to massive Long liquidation on May 2012, plus the weakening prices on commodities due to economy growth concern. Technical traders are prepared to follow the Selling spree if the market breach below support level. All these factors will add up the likely hood for the market to continue heading south. For today, support is located around 2,980 while resistance is pegged at 3,054.

Daily Pivot Point
R2= 3102
R1= 3054
S1= 2980
 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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