Market Overview 25th July 2012

Wednesday, 25th July 2012. The FBM KLCI retraced for the third day consecutively as investors cover some of their holding ahead of economy uncertainties, tension on Euro debt crisis escalated. Other news to follow.

"-U.S. stocks sank Tuesday, resulting in the third straight session of triple-digit losses for the Dow average, following a report that Greece is still unable to pay off what it owes and will need to go through further debt restructuring. The Dow Jones Industrial Average DJIA -0.82%  ended down 104.14 points, or 0.8%, to 12,617.32. The last time it had three straight days of 100-point-plus losses was in early September. It’s lost 2.5% over the past three sessions. The S&P 500 Index SPX -0.90%  fell 12.21 points, or 0.9%, to end at 1,338.31, after touching an intraday low of 1,329.24. The telecom sector and the energy sectors were the worst of the index’s 10 sectors, all of which closed lower.


"- Asia stock markets moved off their lows of the session Tuesday after data showed Chinese manufacturing activity recovered slightly in July, though European debt worries kept the most indexes in negative territory. Japan’s Nikkei Stock Average JP:100000018 -0.24%  and South Korea’s Kospi KR:SEU +0.25% traded fractionally lower, while Australia’s S&P/ASX 200 index AU:XJO +0.10% recovered from its losses to rise 0.1%. In China, the Shanghai Composite CN:000001 +0.24%  slipped 0.2% after briefly trading with gains, while Hong Kong’s Hang Seng Index HK:HSI -0.79%  — which didn’t open until the afternoon due to typhoon conditions in the city — rose 0.2%. The region’s markets improved after HSBC reported that its initial monthly reading of China’s manufacturing activity hit a five-month high."


"-August Soybeans finished down 49 1/4 at 1649 1/4, 57 off the high and 20 3/4 up from the low. November Soybeans closed down 52 3/4 at 1569 1/2. This was 17 1/4 up from the low and 58 1/2 off the high. August Soymeal closed down 13.2 at 509.8. This was 14.8 up from the low and 12.8 off the high. August Soybean Oil finished down 2.17 at 51.58, 2.21 off the high and 0.25 up from the low. August soybeans traded sharply lower into the close but managed to claw their way back from a limit lower move. August soybean meal and soybean oil also traded lower on the day. Traders took profits for the second day in a row following a sharply lower overnight session. Storm systems passed through Wisconsin, northern Illinois, northern Indiana, and Ohio today which most likely benefited soybean growth during pod-setting. The western Corn Belt saw above normal heat today and missed showers causing further stress to soybean crops. The 6-10 weather outlook shows another ridge setting up next week which will push heat into the Central Midwest again. The eastern Corn Belt may see an increase in precipitation but accumulation is expected to be light. Overall, the market feels very uncertain about the forecast going forward. Outside markets turned extremely negative today as stocks traded lower for the 2nd day in a row and the US Dollar move sharply higher.

FKLI- Typical Retracement, Upside Remain Intact. 

Malaysia stock index continue to weaken as investors starting to take some profit due to escalating concern on Euro debt crisis and uncertainties over U.S major companies earning results. At close, the FBM KLCI close 3.60 points lower to 1,632.57 while July contract went down another 5 points to settle at 1,629 with higher active volume transacted yesterday. Technically, these retracement does not jeopardize the medium term uptrend yet but short term the market are heading for further correction. Euro zone debt crisis is not looking good after Moody's Investors Service cut the outlooks for Germany, the Netherlands and Luxembourg to negative. On surface, the white color horizontal trend line will serve as support level as they were formed based on previous lower high around 1,620 and double top around 1,605 level. Of course, these support trend line are not a definitive level for the index futures to rebound when it hit, but rather an expectation for immediate support level. For today, pivot support is located around 1,620 while resistance is pegged at 1,635.

Daily Pivot Point
R2= 1642
R1= 1635
S1= 1624
S2= 1620


FCPO- Extending Losses With Broader Commodities Price Outlook Weaken. 

CPO futures continue to travelled lower on broader commodities price weakness yesterday. Commodities prices are likely getting strong pressure from rising Dollar index at the moment. To make things worse, slightly improve weather on U.S would dampen the possibilities for the Soy products to recover. At close, the benchmark Oct dipped about RM64 to 2,926 while Soy oil retraced about 1.24 cents or 2.3% to 52.52 cents during Asia trading time, 6.46PM +8GMT. There is still some downside room to go before the benchmark Oct hit the next major support level which is based on previous 5~6 weeks low. The weakness on palm oil futures is likely continue judging on lower than expected demand shown by July export figures so far. No sight of recovery spotted so far and the record high discount on palm oil versus Soya oil would not halt the market from falling further. For today, pivot support is located around 2,878 while resistance is pegged at 2,951.

Daily Pivot Point
R2= 2976
R1= 2951
S1= 2902
S2= 2878
 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.