Monday, July 16, 2012

Market Overview 17th July 2012

Tuesday, 17th July 2012. The FBM KLCI went up yesterday amid strong recovery made by overnight U.S market previously while regional index mostly ended mixed. Other news to follow.

"- U.S. stocks declined Monday, with two of three benchmark indexes off for a seventh in eight sessions, after the International Monetary Fund reduced its global economic outlook.The Dow Jones Industrial AverageDJIA -0.39%  shed 49.88 points, or 0.4%, to 12,727.21, with American Express Co.AXP +1.23%  among its risers, up 1.2% ahead of its second-quarter earnings report on Wednesday. The S&P 500 index SPX -0.23%  declined 3.14 points, or 0.2%, to 1,353.64 with the industrial and consumer-discretionary sectors the worst performers and energy faring best among its 10 industry groups.

On the New York Mercantile Exchange, oil futures CLQ2 -0.14%  rose $1.33 to $88.43 a barrel. The Nasdaq Composite COMP -0.40%  fell 11.53 points, or 0.4%, to 2,896.94.
"- Mainland Chinese stocks tumbled on Monday after a few corporate profit warnings and some downbeat comments on the economy from Premier Wen Jiabao, sending the Shanghai Composite to its lowest finish in more than three years. Australian and South Korean shares advanced in the wake of strong U.S. earnings reports. The Shanghai Composite Index CN:000001 -1.74% dropped 1.7% to 2,147.96, a closing level it hasn’t seen March 13, 2009, when the benchmark ended at 2,128.85. The Shenzhen Composite Index, meanwhile, fell to 889.10, losing 3.6% for its worst percentage drop since a 4.1% plunge on March 28. The performance on mainland exchanges weighed on some other markets in the region, with Hong Kong’s Hang Seng Index HK:HSI +0.15%  up 0.2% after a choppy session that saw the benchmark change direction a few times. Taiwan’s Taiex ended 0.2% lower."

"-August Soybeans finished up 39 at 1633 3/4, 2 1/4 off the high and 23 3/4 up from the low. November Soybeans closed up 38 at 1590 1/2. This was 22 1/2 up from the low and 8 off the high. August Soymeal closed up 13.2 at 487.3. This was 9.3 up from the low and 3.3 off the high. August Soybean Oil finished up 0.95 at 54.65, 0.02 off the high and 0.67 up from the low. November soybeans extended their overnight gains and settled sharply higher (up 38 cents) on the day. Soybean meal and oil traded higher with soybean meal posting a new high for the move. Showers last week provided beneficial rainfall for the southeast and delta but the two week forecast calls for warm temperatures and below normal rainfall, which will likely continue to stress the Midwest soybean crop. Reports that soybean growth has slowed and plants are stunted in the central Midwest have traders wondering if the most recent USDA yield estimate of 40.5 bushels/acre is too high. One market analyst lowered their average soybean yield to 40 bushels/acre from 42. The trade expects good/excellent ratings to be cut 5 points from last week in the afternoon Crop Condition reports. NOPA monthly crush data showed June crush at 134.156 million bushels vs. 117.178 million bushels in June 2011. This was more than 1 million bushels above expectations and suggests that the record high prices for soybeans have done little in the way of destroying demand. Export inspections for the week ending July 12, 2012 were reported at 14.271 million bushels. Export shipments need to average 12.3 million bushels each week to reach the USDA projection. The outside markets provided support as the US Dollar traded slightly lower and crude oil was higher on the day.'

FKLI- Market Rising With Stronger Fundamental

The stock index and index futures is moving on higher after it have retraced on previous Friday. Paving way for some correction previously is crucial for us to decide how well the market can continue its preceding uptrend. With numerous earning announcement pending for these coming weeks on U.S market, we are likely to expect U.S stock index to reap positive effect if there is better than expected earning announcement from those companies. Meanwhile for local market, rumour on pre-election rallies are now getting in motion as most political parties are preparing to begin their campaign. Technically, the index futures has found its new uptrend after it successfully breached all time high around 1,608 two weeks ago. It this is not just a temporary rally that last for a few days, but rather a concrete uptrend that created from Bullish formation such as higher lows and higher highs. In other words, this uptrend is not made by a single "parabolic" rally but rather a healthy retracement and follow up recovery after that. Buyers will remain aggressive especially if there is any new high formed again. For today, pivot support is located around 1,629 while resistance is pegged at 1,637.
Daily Pivot Point
R2=1637
R1= 1634
S1= 1629
S2= 1627

FCPO- Dry Weather Lifts Up Soy Prices. 

FCPO is getting most of the benefits from surging Soy prices this week. On yesterday close, the benchmark Oct rose about RM51 to 3,120 while the most active traded Soy bean oil surged about 0.66 cents to 54.35 cents per pound during Asia trading session, 6.09PM +8GMT. Tracking the better than expected price outlook from Soy, Oct contract open gap up about RM43 on early session, and kept on going up to 3,161, forcing the Short holder to cover their positions. Soybeans advanced to a four-year high on concern that dry weather in the U.S. will shrink yields, reducing global oilseed supplies. The U.S. soybean crop was in the worst condition it’s been in for the week of July 8 since 1988, U.S. government data showed. A “large-scale, intense heat wave” will affect most of the central U.S. during the next 10 days, increasing stress on crops after the seventh driest May-to-June period since 1895, T- Storm Weather LLC said July 13.
With the ability for the CPO market to open gap up and manage to stay above the resistance trend line mentioned on previous Friday post, medium and short term direction is likely remain positive. Outlook for palm oil futures is likely to improve further as demand for it will likely go up due to Ramadhan festival occasion. It was a rare sight to see reliable Bullish formation on daily chart because it took more time and serious amount of Buying activities to create those formation. Fortunately yesterday, the market has begin to formed this Bullish formation when it gap up above 3,110 level. This would be the early stage indication for medium term Bullish momentum and it should be confirm if the market manage to breach above six weeks high around 3,180 level. For today, pivot support is located around 3,099 while resistance is pegged at 3,182.

Daily Pivot Point
R2=3182
R1=3151
S1= 3099
S2=3078
 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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