Wednesday, October 3, 2012

Palm Oil Futures First Sign Of Recovery 4th Oct 2012

Thursday 4th Oct 2012. The spot month index futures closed lower yesterday after the market hit its all time high above 1,658 level while palm oil futures is likely set for further recovery judging from previous Sell-off. Other news to follow.

"Maximum"- Don't hit the gas pedal to the metal when you trade in financial market, no one, not even the guru know where does the market is going to go for sure in the next 5 seconds.

"-Japanese stocks ended lower while Australian and Hong Kong shares pared early gains on Wednesday as lingering uncertainty over the timing of a bailout for Spain and downbeat data from China turned investors cautious. Japan’s Nikkei Stock Average JP:100000018 -0.45%  fell 0.5% to 8,746.87 and Taiwan’s Taiex XX:Y9999 -0.44%  declined 0.4% to 7,684.63. After a strong start as investors returned from a long weekend, Hong Kong’s Hang Seng Index HK:HSI +0.23% narrowed most of those gains, finishing 0.2% higher at 20,888.28. In Australia, the S&P/ASX 200 index AU:XJO +0.13% rose 0.1% to 4,438.60, a 14-month high, but well off the day’s highs. Stock markets in China and South Korea were closed for holidays."

FKLI- Tested The Previous High

The FBM KLCI retraced slightly from the high yesterday, closing at 1,649.75 level while after gaining steadily for five session straight the Oct contract went down about 6.50 points to 1,649.50. Volume was recorded slightly higher to 4,851, signifying some Selling interest when the market retraced. It is still too early to tell whether the stock index, especially for the index futures will retrace further from here after it retreat slightly from it's previous high or resistance level. Trading is not a science where something will happen for sure after it hit some important pivot level such as support and resistance area. What we can do is to time the likelyhood for the market to move next when it hit that pivot level. If the market does start to move what it suppose to be after hitting certain pivot level, then there is some opportunity to exploit at that moment. Take yesterday price action for example, the Oct contract hit it's major resistance for the first time after 3 weeks, and then starting to retrace back below 1,650 level. When the price start to retrace more than it should be after hitting it's all time high, chances to go Short and reap few points profit is highly successful catch. This is because the likelyhood for the market to retrace further is higher as profit taking will start to kick after the index futures retrace below 1,650 level which is also it's first pivot support level. On medium term, market is still travelling within sideways range with 1,660~1,585 even though the Oct contract has breached its previous high at 1,658. More time is needed for the market to resume its preceding uptrend and it require the Oct contract to sit tight above 1,660 at least for  one session.

Daily Pivot Point
R2= 1667
R1= 1658
S1= 1641
S2= 1634

FCPO- First Doubtful Sign For Recovery

Palm oil futures snapped previous five sessions losses by closing at the positive territory yesterday. The benchmark Dec went up about RM96 to end at 2,351 level, day low and high was traded at 2,230 ~ 2,387 level. Volume was recorded slightly lower to 26,397 yesterday. Soy oil was down 0.38 cents to 50.31 cents per pound during Asia trading session, +8GMT 6.19 pm yesterday. So far, palm oil futures has dip about 23% in five weeks, previous Tuesday 8.5% Sell down was the steepest correction made in a single session this year. Technically, the benchmark Dec has shown the first sign of recovery based on yesterday Bullish Harami candle on daily chart at the close of the day. The price action somehow fit the description of a candlestick chart pattern in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body. In terms of candlestick colours  the Bullish Harami is a downtrend of negative-coloured (red) candlesticks engulfing a small positive (green) candlestick, giving a sign of a recovery from a downward trend. Although most Bullish Harami in the text book will suggest possible upwards trend reversal and the end of a downtrend, it would be the case for palm oil futures. Market is still susceptible for another Sell-off if there no improvement on year end palm oil demand and investors are still concern about the massive stocks pile up for the upcoming palm oil report. Word out, palm oil stocks will hit 2.6 millions tons for Sept month, which will give more Selling pressure to that market. On short term, palm oil futures is likely rebounding from previous oversold reading, maybe nothing more than a 10% rebound from 2,230 low. For today, pivot support for the benchmark Dec is located around 2,258 while resistance is pegged at 2,415.

Daily Pivot Point
 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.