Wednesday, November 7, 2012

Downside Potential Magnified 8th Nov 2012

Thursday, 8th Nov 2012. Global market re-acted slightly negative on post Obama victory over U.S presidential election on yesterday afternoon, Asia time. Other news to follow.

"- U.S. stocks dived on Wednesday — the worst day of the year for the Dow Jones Industrial Average — as anxiety about the “fiscal cliff” and Europe’s economic troubles hammered sentiment. After dipping under 13,000 for the first time since Sept. 4, the Dow Jones Industrial Average DJIA -2.36%  sank 312.95 points, or 2.4%, to end at 12,932.73. The Dow last closed under 13,000 on Aug. 2. In 2008, the Dow fell 5.1% the day after Obama was elected to the White House, after rising 3.3% on Election Day. Dropping under the psychologically significant 1,400 level, the S&P 500 indexSPX -2.37% lost 33.86 points, or 2.4%, to 1,394.53. The finish below the support line sends a bearish technical signal, Frederick said.

"- Asia stocks were off lows on Wednesday after incumbent Barack Obama won a second term as president of the United States. Hong Kong’s Hang Seng Index HK:HSI +0.71%  traded flat and the Shanghai Composite Index CN:000001 -0.01%  lost 0.3%. Japan’s Nikkei Stock Average JP:100000018 -0.03%  traded down 0.1%, South Korea’s Kospi KR:SEU +0.49%  put in a flat performance while Australia’s S&P/ASX 200 indexAU:XJO +0.71%  advanced 0.7%."

"- Crude-oil futures finished lower Wednesday, pressured by a bigger-than-expected increase in last week’s U.S. stockpiles as well as demand concerns tied to ongoing economic and financial woes in Europe. Also, earlier relief in the market over election returns showing a second term for President Barack Obama gave way to worries about the so-called U.S. fiscal cliff. Crude for December delivery CLZ2 +0.32%  fell $4.27, or 4.8%, to settle at $84.44 a barrel on the New York Mercantile Exchange. The contract had rallied 3.6% on Tuesday."

"-November Soybeans finished down 8 at 1508 3/4, 14 off the high and 8 1/2 up from the low. January Soybeans closed down 8 1/2 at 1507. This was 9 3/4 up from the low and 14 3/4 off the high.

December Soymeal closed down 3.2 at 469.5. This was 4.3 up from the low and 5.9 off the high.
December Soybean Oil finished down 0.06 at 48.62, 0.44 off the high and 0.21 up from the low. January soybeans finished the day lower but off session lows and above $15.00. Technical selling as well as a stronger US Dollar offered resistance to prices. Outside markets were sharply lower with the Dow Jones down over 200 points. Concerns that no agreement will be made on the fiscal cliff and uncertainly over the path of the global economy pushed investors to the sidelines and towards safe havens like the US Dollar. Underlying support is coming from strong export demand from China and a tight global supply outlook if South America fails to produce a bumper crop this year. Weather has turned more favorable in South America this week. Argentina is expected to dry down before seeing another chance for rainfall this weekend. Central and northern Brazil is expected to see rainfall this week which should relieve soil moisture deficits. Additional pressure was linked to thoughts that the USDA will raise the US average soybean yield and production estimate in this Friday's USDA report."

FKLI- Short Term Bearish Outlook

Global market re-acted neutrally on the latest result on U.S general election yesterday. Barrack Obama has been re-elected for the next four years as U.S president with his pledge to reduce deficit, cut spending and most important of all, jobs creation. With U.S country moving forward with their preceding leader, our local stock index and index futures have moved lower due to correction phase. At close, the stock index was closed slightly unchanged at 1,645.53 level while index futures for Nov contract ended one point lower to 1,640.50. Volume were recorded slightly lower at 6,110 lots for the spot month index futures. Technically, more short term downside is likely to occur soon after the Nov contract manage to breach below the Support level around 1,640 level on previous Tuesday. We might need more price action and time for medium term outlook as even a 3% retracement since last week, spot month index futures daily chart still suggest that all these corrections would turn out to be a typical pull back on an uptrend. For today, pivot support for Nov contract is located around 1,634 level while resistance is pegged at 1,646 followed by 1,652.

Daily Pivot Point
R2= 1652
R1= 1646
S1= 1637
S2= 1634

FCPO- Taking Its Time Going Down. 

What is the market up to on short term perspective, price refuse to go down or up straight, at least not for the next 40 points straight, not anymore. The margin for the commodities prices to move recently has been limited substantially. Like a rubber, market prices tend to fluctuate indecisively after recovering or dropping for certain period. The keyword here would be "resilient", and within 2,360~2,450 level based on previous high and low. On short term perspective, these upper range and lower range will also serve as immediate Support and Resistance reference until it is broken on either side. Traders can expect more downside potential on the benchmark Jan if the immediate Support has overtaken or further recovery if the benchmark Jan manage to breach the immediate Resistance or upper range shown on the hourly chart above. Medium term wise, more sign has pointed to downside as is another lower high and lower low formed on hourly shown above. Although this Bearish price formation does not result in vicious Sell-off such as previous tow months, market seems to be weaken so far after the market was unable to recover from second gap down this week. Long holders who hold their positions overnight might be expose to higher risk taking overnight position as market participants are still concern about the palm oil stocks built up for Oct 2012 as it may went up over than expected plus Bursa Derivative will be closed on next Tuesday for Deepavali and Thursday for Awal Muharam public holiday.

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.


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