Sunday, October 28, 2012

Hitting New High, Not The Ceiling 29th Oct 2012

Monday, 29th OCt 2102. Both index futures and commodities futures on Bursa Derivative making new highs on previous Friday, defying what most investors and trader thought of "impossible."Other news to follow.

"- U.S. stocks on Friday finished with weekly losses after earnings reports did little to offset worry about the global economy. "When you saw these solid companies reporting basically negative revenue growth, it painted a very clear picture that the global economy is growing at a very modest rate," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management in Des Peres, Mo., pointing to Dow components International Business Machines Corp. IBM +0.87% and McDonald's Corp. MCD -0.71% as among those setting the tone for third-quarter earnings. The Dow Jones Industrial Average DJIA +0.03% rose 3.53 point to 13,107.21, leaving it with a weekly loss of 1.8%. The S&P 500 index SPX -0.07%fell 1.03 point to 1,411.94, down 1.5% from the week-ago close. The Nasdaq CompositeCOMP +0.06% advanced nearly 2 points to 2,987.95, down 0.6% for the week."

"- Asia stocks diverged in a choppy session on Thursday, as Japanese shares got a late lift from another bout of yen weakness but Chinese shares came under selling pressure. Japan’s Nikkei Stock Average JP:100000018 +1.13%  ended a mostly lackluster session 1.1% higher, after the dollar moved back over ¥80 to a high not seen since late June. Elsewhere, Australia’s S&P/ASX 200 index AU:XJO +0.10% AU:XJO +0.10% rose 0.1% while South Korea’s Kospi KR:SEU +0.55%  rose 0.3%. In Chinese trading, Hong Kong’s Hang Seng Index HK:HSI +0.21%   traded down 0.1%, after gaining for nine sessions, while the Shanghai Composite Index CN:000001 -0.68%  lost 0.3%."

"-Crude-oil futures scored a slight gain by the close on Friday, but still suffered a loss of more than 4% for the week as mixed data on the global economy underscored questions about prospects for energy demand. U.S. economic data Friday “seemed to be viewed as bullish, allowing crude oil to turn a small loss into a modest gain,” said Darin Newsom, senior analyst at Telvent DTN. “Longer term though, ample supplies are expected to hold potential rallies in check.” Crude for December delivery CLZ2 +0.22% settled at $86.28 on the New York Mercantile Exchange, up 23 cents, or 0.3%. It traded between $85 and $86.37 on Nymex, though it did spend much of the session trading modestly lower."


"-November Soybeans finished down 2 3/4 at 1561 1/4, 5 1/2 off the high and 8 3/4 up from the low. January Soybeans closed down 2 1/4 at 1563 3/4. This was 10 up from the low and 5 off the high. December Soymeal closed up 2 at 483.4. This was 4.4 up from the low and 0.6 off the high. December Soybean Oil finished down 0.49 at 50.96, 0.56 off the high and 0.26 up from the low. November soybeans traded lower for most of the day but buying emerged in the second half of the session and closed with a firmer tone. The trade was choppy to lower throughout the day as traders exited the market and positioned ahead of November option expiration. Soybean basis bids were steady to firm in the Gulf of Mexico no rising barge costs but export interest was subdued. Interior bids remain firm, led by a strong meal market and positive crush margins across the Corn Belt. The weather remains mixed for South American over the weekend with a high pressure ridge setting up in central Brazil which could boost temperatures and limit rainfall. Argentina has dried down to end the week but some models suggest heavy rainfall may return early next week which could cause further delays to planting. The bull camp attempted to extend gains this morning however the lack of supportive news midday turned futures lower with the help of unfavorable outside markets. The US Dollar pushed higher after the US GDP beat market estimates but US Stocks were lower on worse than expected corporate earnings which added pressure to the commodity complex."

FKLI- Still Good To Go Up.

Usually I would not update any write up if my previous post was align with current movement of the market but over time you just have to mention something about the market outlook after silence for few days. Stock index ended the day with new historical highs, gaining about 3.90 points to settle at 1,671.89 on previous Thursday. The same case goes for index futures for Oct contract which stood higher at 1,674 level, the day high and low was traded within 1,675.50~1,669.50 level. Volume for the spot month grew to 6,214 but 70% from that came from spread trade instead of outright. For most traders who prefer to Short at the high, this moves proved fatal on this particular rally as market seems to continue going up instead of retracing for some technical correction. Huge risk involve when counter trend traders do not know what they are dealing with if the price went beyond their expectation and worse thing could happen if the traders refuse to cut loss and hope for slim retracement after taking Short positions every time the market went up. Bottom line, it is easier to trade with the trend instead of counter trend it, the risk and reward just don't worth it. Most season traders who made it year after years in the market would agree the only system that works would be using trend following system, or at least using this "sit tight when you right" strategy. Easier said than done, most traders or even experience traders find it hard to take the beating when the market is going against them. They give up too soon and blamed that trend following is just another generic strategy that does not work for them. Fact is, the best traders in the world use trend following as their highly profitable winning strategies year after years. Richard  Dennis and  Bill Eckhardt were part of the successful trend following masters who use "turtle trading" strategies, and their trading system is available for FREE. I also receive some traders complaint that trend following does not work in index futures or FKLI for instance, obviously the long term chart does not seems to agree. 
Technically, index futures for Oct contract Bullish momentum is here to stay as price action have created another higher low and higher high on daily chart. For today, pivot support for Oct contract is located around 1,667 while resistance is pegged at 1,679.

Daily Pivot Point
R2= 1679
R1= 1676.5
S1= 1670.50
S2= 1667

FCPO- Gained On Better Demand

Palm oil futures gained on steady increased in demand on previous Thursday prior to Bursa Derivative Hari Raya Haji holiday on Friday. Average palm oil export was reported around 1.28 millions ~ 1.30 millions tons for the 1st-25th Oct Vs Sept 2012, market participants are expecting better improvement over palm oil demand toward year end. On previous Thursday closed, the benchmark Jan went up about RM25 to 2,603, the day high and low was traded within 2,615 and 2,543 respectively. Volume was traded higher to 21,721 lots on previous Thursday compared to  13,027 lots on previous Wednesday. Prior to Bursa Derivative holiday on previous Thursday, the Dec contract Soy oil was up about 0.24 cents to 52.09 cents per pound on 6.10PM 25th Oct 2012. Unfortunately, most of the rally made on Soy oil just before Bursa Derivative closed on previous Thursday was wipe out the next day due to disappointing Soy bean sales on USDA. The last price transacted on previous Friday for Soy oil December contract was 50.96 cents per pound, down about 1.13 cent from 52.09 on  6.10PM 25th Oct, previous Thursday. Technically, the benchmark Jan is running smoothly on recovery gear, heading north steadily after the futures manage to breached previous weekly high or immediate resistance level above 2,530. Looking at the price action with series of higher lows and higher highs created so far, the market is likely hovering on on short term recovery mode. The reason why I kept on saying that it is a short term recovery mode was anything can go wrong if the market happen to breach below the long term support trend line (not shown on chart, best drawn on daily chart), that was the first line of defence when the market goes down from here. Sellers are likely joining the Selling parade if the price goes down below pivot support level which is expected to located around 2,559 level. For today, the benchmark Jan is poised to open lower judging on Soy oil major correction occur on previous Friday 1closed.

Daily Pivot Point
R2= 2659
R1= 2631
S1= 2559
S2= 2515
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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