Sunday, September 9, 2012

Market Overview 10th Sept 2012

Monday, 10th Sept 2012. The FBM KLCI manage to regain some ground after dipping for the past two sessions last Friday amid positive regional performance which reap off the positive news on U.S market. Other news to follow.

"- U.S. equities finished modestly higher Friday, with major indexes scoring gains for the week to end at their highest levels in years as lackluster August jobs data fueled speculation that the Federal Reserve may start another round of monetary stimulus. The Dow Jones Industrial Average DJIA +0.11%  rose 14.64 points, or 0.1%, to 13,306.64. The blue-chip benchmark closed at its highest level since December 2007, with a 1.7% gain for the week. The S&P 500 Index SPX +0.40%  rose 5.8 points, or 0.4%, to 1,437.92, closing up 2.2% from a week ago. It marked its highest close since January 2008. Of the 10 sectors in the index, consumer stocks led decliners, while materials led advancers. The Nasdaq Composite Index COMP +0.02%  inched up 0.6 point to 3,136.42, tacking on 2.3% for the week to log its highest finish since November 2000.."

"- Mainland Chinese and Hong Kong stocks posted their strongest performance in more than seven months on Friday after Beijing announced a slate of new infrastructure projects to spur a slowing economy. Other Asian markets also rallied because of a celebratory mood in global markets after the European Central Bank unveiled an expansive bond-buying plan to stabilize markets, and as investors looked ahead to a U.S. jobs report with optimism.The Shanghai Composite CN:000001 +3.70%  surged 3.7% and Hong Kong’s Hang Seng Index HK:HSI +3.09%  climbed 3.1%, each recording their best single-day percentage gain since mid-January. South Korea’s Kospi KR:SEU +2.57%  rallied 2.6%, Japan’s Nikkei Stock AverageJP:100000018 +2.20%  rose 2.2%, Taiwan’s Taiex XX:Y9999 +1.34% advanced 1.3% and Australia’s S&P/ASX 200 index AU:XJO +0.30%  added 0.3%."

"- Crude-oil futures settled higher Friday, shaking off mid-session weakness as disappointment over the U.S. nonfarm payroll numbers gave way to hope the negative report would usher in faster stimulus measures. Crude for October delivery CLV2 +0.80% rose 89 cents, or 0.9%, to end at $96.42 a barrel on the New York Mercantile Exchange."

"-November Soybeans finished down 10 1/2 at 1736 1/2, 15 1/2 off the high and 10 1/4 up from the low. January Soybeans closed down 10 at 1735 3/4. This was 9 3/4 up from the low and 15 1/2 off the high. December Soymeal closed down 1.2 at 526.9. This was 4.5 up from the low and 6.3 off the high.

December Soybean Oil finished down 0.76 at 56.62, 1.03 off the high and 0.04 up from the low. November soybeans traded sharply lower in the close as traders took profits ahead of the weekend and next week's USDA report. Soybean meal and oil traded lower as well. A closely followed private analyst estimated that the final US soybean yield would be 35.4 bushels per acre which was down from prior estimates of 37.2. Production was estimated at 2.639 billion bushels vs. prior estimates of 2.791. Both the yield and production estimates are slightly below the current USDA forecast. Ideas that farmers will sell soybeans right off the combine and that harvest will move along at record pace have pressured the November contract since last week. Total export sales for the week ending August 30th were reported at 525,000 tonnes which was slightly below market estimates. The fact that the 2012/13 sales pace is currently 60% of the current USDA estimate vs. the 5 year average of 35% offered support. The US Dollar traded sharply lower on the day which added a positive spin to most commodity markets."

FKLI- Technical Recovery For The Moment

Downside spiral was halt on last Friday when the equity index manage to stop the market from failing further amid strong regional performance due to ECB plan to extend their bond buying programme. At close the FBM KLCI went up about 6.56 points to 1,624.55, and spot month index futures manage to inches up about 3.50 points to 1,615 level, before that the market went down to new monthly low at 1,602 on morning session. Volume was traded lower compare to previous Thursday but active, about 10,076 lots was transacted on spot month index futures last Friday. Despite we have some external positive news such as upcoming quantitative easing by U.S and ECB plan to buy their sovereign bond, but it may not be the main drive to help our market to recover substantially. Now is the time to take a good look on our own market instead of trying to correlate with other market because correlation would just brings you 50% odds, it just works half way. Price action is always a better choice to gauge how the market is going to behave in the future. If a price dropped below an immediate support area, that market is likely (more than 51%) to retrace further rather than to rebound. Vice versa if the price breach above resistance level. For spot month contract, Buyers manage to close the day after the market went down to at least two months low in previous Friday morning session. The hammer candle formed on daily chart shown above signifies that Selling pressure may come to halt, for temporary. My initial assessment does not affirm that correction is over, we still need more Bullish price action and time before we can conclude that the correction is finish. For today, pivot point support for spot month contract is located around 1,605 followed by 1,595 while resistance is pegged at 1,621.  

Daily Pivot Point
R2= 1627
R1= 1621
S1= 1605
S2= 1595

FCPO- Loss For The Third Consecutive Session

Commodities is taking a hard beating from recent supplies uncertainties as there was rumour that palm oil stocks will increase more than expected. At close, the benchmark Nov loss about RM21 to 2,927, the day high and low was located at 2,947~2,895 respectively. It is not a surprise occasion when the palm oil futures continue to dip down to weekly low as most traders are still concern about the possible rising stocks and inventories for Aug month. To make things worse, this correction is going to sustain as overnight Soy oil continue to falter last Friday. December Soybean Oil finished down 0.76 at 56.62 while Oct Soybean oil finished down about 0.75 cents to 56.19 cents per pound. There is no sign of medium term recovering yet even though the palm oil futures have dip for fours session straight. What we see so far was intraday recovering from the low after the market has dipped substantially. Palm oil futures need to at least snap these losing string before we can expect any further recovery this week. Double Hammer candles formation on daily chart shown above may suggest that Selling pressure is likely contained and we should be expecting market to closed higher for the upcoming session. Be advise that the medium term market sentiment is likely turn to Bearish and today weak MPOB report will likely confirm it. If the MPOB report come out as expected, maybe there would not be any impact to the market as most weakness has been priced in last week. 

Daily Pivot Point
R2= 2975
R1= 2951
S1= 2899
S2= 2871
 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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