Market Overview 24th July 2012

Tuesday, 24th July 2012. Malaysia stock index retrace for the second session yesterday, paving some way for further correction after it rose to record high last week. Other news to follow.

"-U.S. stocks fell hard Monday but pared steep losses from earlier in the session, as worries about Europe’s fiscal health flared back up, pushing U.S. Treasury yields to new lows and boosting the dollar. The blue-chip index DJIA -0.79% , which fell nearly 240 points earlier in the session, finished the day down 101.11 points, or 0.8%, at 12,721.46, with 24 out of 30 components trading lower. The S&P 500 Index SPX -0.89%  closed down 12.14 points, or 0.9%, at 1,350.52, after touching a low of 1,337.56 earlier in the session. All 10 sectors were lower, led by a drop in materials and consumer-discretionary stocks. The Nasdaq Composite IndexCOMP -1.20% fell 35.15 points, or 1.2%, to close at 2,890.15. Earlier in the session, the Nasdaq fell as low as 2,852.88.

"- Asian stocks received a thrashing Monday as fears that Greece may not receive further aid and rising worries over Spain prompted a deep, region-wide sell-off, with Hong Kong equities suffering the most. The dollar jumped against most other major currencies, barring the yen, whose gains against the greenback as well as the euro applied additional selling pressure in Tokyo. Crude-oil and other commodities tumbled. Japan’s Nikkei Stock Average JP:100000018 -1.86%  finished 1.9% lower, South Korea’s Kospi KR:SEU -1.84% dropped 1.8%, Australia’s S&P/ASX 200 Index AU:XJO -1.67%  lost 1.7% and Taiwan’s Taiex XX:Y9999 -1.90%  slid 1.9%. China’s Shanghai CompositeCN:000001 -1.26% dropped 1.2%, while the Hang Seng Index HK:HSI -2.99% was the region’s worst performer, slumping 3%, or 587.33 points, to 19,053.47 in Hong Kong."


"- Oil ended lower Monday as concerns about the future of Europe rocked markets and raised investors’ doubts about demand for crude. Crude oil for September delivery CLU2 -0.29%  declined $3.69, or 4%, to $88.14 a barrel on the New York Mercantile Exchange. That was the lowest settlement for oil since July 13, and the largest one-day percentage decline Dec. 14."

"-August soybeans are trading 34 cents lower midday but well off session lows. August soybean meal is down $13 while soybean oil is down 75. Traders are anticipating soybean good/excellent ratings to decline 3-5% in this afternoon's Crop Condition Report. Soybeans traded sharply lower overnight after widespread liquidation was seen in the commodity complex caused by negative economic news out of Europe. Temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska this week; increasing stress on soybean crops. Scattered showers could move through the northern portion of the Corn Belt this week but confidence is still low in this forecast. Traders are concerned that the blistering temperatures in the western Corn Belt the next 3 days will mean irreversible damage to soybean yields in Nebraska and Iowa. A major banking institution revised their average US soybean yield to 39.5 bushels/acre and raised their 3 month price outlook to $20.00. Export inspections for the week ending July 19th were pegged at 15.7 million bushels. This was up from 14.3 million bushels last week while 11.7 million bushels are needed each week to meet the USDA forecast for the 2011/12 marketing year."

FKLI- Some Temporary Retracement Signal 

Stock index went down substantially after some bad performance from regional index and further disappointing stock market outlook from the west. Most investors are sceptic about the earning results announcement made on U.S major companies as most of them would not achieve positive results due to economy uncertainties. As a results, The FBM KLCI losses about 6.83 points to settle lower at 1,636.17 while July contract dipped about 13 points to 1,633.50. Spot month volume was traded slightly higher at 3,779. Even the volume recorded on typical pace, the retracement made on yesterday session was enough to justify serious Selling pressure that made the July contract dipped about 13 points. Technically, the index futures is expected to correct further based on Bearish chart pattern known as Evening Star formed (before that was shooting star) on FKLI daily time frame. These chart pattern signifies an upside peak (condition) on any market. Sellers quickly gained control and push the market down, things could got worse if the July contract manage to breach below today pivot second /S2 level at around 1,627. But for the moment it is still early to tell whether the market is going down for major correction on this week.

Daily Pivot Point
R2=1647
R1= 1640
S1= 1630
S2= 1627

FCPO- Palm Oil Prices Under Pressure By Weaker Than Expect Export Figures

CPO futures went down amid weaker than expected export figure on last Friday and further price correction occur on Soya oil during Asia trading session yesterday. The most actively traded Soy oil retraced about 0.94 cents to 53.41 cents per pound on 6.16PM +8GMT. After it start the session with gap down from 3,042 to 3,000 level on morning session, the benchmark Oct dipped about RM52 to 2,990. Volatility is always remain the main headlines when it comes to describe how the market should move. Last week, palm oil futures were traded around 3,160 level due to supplies concern on Soya bean and oil, but the rally quickly reverse its role and fell swiftly not even one day after that. Major commodities prices are likely to be pressure by the rising Dollar index at the moment. Technically, the benchmark Oct is expected to retrace further as it has breached below the support trend line shown on hourly chart above. And couple with the gap down yesterday, it signifies stronger Bearish sentiment when the market failed to recover above 3,000 on afternoon session.  For today, pivot support is located around 2,950 while resistance is pegged at 3,028.

Daily Pivot Point
R2=3028
R1= 3009
S1= 2970
S2= 2950
 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.