Monday, November 19, 2012

Temporary Rally On Commodities Futures 19th Nov 2012

Monday, 19th Nov 2012. Commodities futures on Bursa Derivative closed lower on previous Friday and the new benchmark for Feb contract will become the most active month this week. Other news to follow.

"- U.S. stocks turned higher Friday after House Speaker John Boehner voiced belief that the so-called fiscal cliff can be averted. The Ohio Republican voiced the sentiment following talks at the White House. "If these guys can leave the meeting today with a sense of optimism" that would help, said Jack Ablin, chief investment officer at BMO Private Bank. The Dow Jones Industrial Average DJIA +0.37%rose 28.29 points, or 0.2%, to 12,570.67. The S&P 500 index SPX +0.48% climbed 3.51 points, or 0.3%, to 1,356.84. The Nasdaq CompositeCOMP +0.57% added 3.84 points, or 0.1%, to 2,840.7. "

"-Japan stocks rallied hard Friday, outpacing regional markets and standing tall in a week of hefty losses for global equities, as the yen’s recent weakness on speculation that a radical change in monetary policy may be imminent boosted exporters.

Japan’s Nikkei Stock Average JP:100000018 +2.20% jumped 2.2%, adding to Thursday’s 1.9% surge, while Hong Kong’s Hang Seng Index HK:HSI +0.24%  edged slightly higher.Many other markets suffered, however, with the Shanghai Composite indexCN:000001 -0.77%  dropping 0.8%, South Korea’s Kospi KR:SEU -0.53%  dropping 0.5%, Australia’s S&P/ASX 200 index AU:XJO -0.29%  losing 0.3% and Taiwan’s TaiexXX:Y9999 -0.19% shedding 0.2%."
"-January Soybeans finished down 35 3/4 at 1383 1/4, 44 1/2 off the high and -17 3/4 up from the low. March Soybeans closed down 16 at 1368. This was 12 up from the low and 22 1/4 off the high.
December Soymeal closed down 5.9 at 424.6. This was 3.7 up from the low and 7.7 off the high. December Soybean Oil finished down 0.41 at 47.05, 0.65 off the high and 0.44 up from the low. January soybeans closed 18 3/4 cents lower on the day and down 68 cents for the week. The market was down as much as 29 3/4 cents into the pit opening with futures moving down to the lowest level since June 22nd which was about the time that the mid-west turned dry. Weakness in outside market forces, news from China that crushers had cancelled 600,000 tonnes of soybean purchases for December and January delivery and a non-threatening weather outlook for South America into early next week were seen as bearish forces. Impressive demand news has not been enough in recent weeks to slow the active fund selling and the market stayed under pressure even with better than expected weekly sales news. Sales for soybeans came in well above expectations at 559,700 metric tonnes for the current marketing year and 25,500 for the next marketing year for a total of 585,200. As of November 8th, cumulative soybean sales stand at 77.0% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 56.7%. Sales of 187,000 metric tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 234,600 metric tonnes for the current marketing year and none for the next marketing year for a total of 234,600 which also exceeded expectations. Cumulative meal sales stand at 59.2% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 38.7%. Sales of 59,000 metric tonnes are needed each week to reach the USDA forecast. Oil sales came in at 21,000 metric tonnes. Sales of 4,600 tonnes are needed each week to reach the USDA forecast. The market saw solid gains off of the early lows as corn prices pushed higher on the day, wheat recovered from the lows and the stock market managed to push higher on the day. December meal closed moderately lower on the day as well and managed to push to the lowest level since July 3rd while December oil closed moderately lower after first challenging Monday's 26 month low."

FCPO- Palm Oil Price Outlook May Improve Early Next Year

Palm oil prices may improve next year after the new reduced export tax scheme being implement. The revise palm oil export tax scheme was made by Malaysia official was design to stay competitive with other palm oil exporters regionally. On previous Friday, the new benchmark Feb ended lower about RM32 to 2,429, hovering within 2,439~2,416 level. Looking on correlation wise, most of the weakness on palm oil futures is likely contributed by Soy oil, which currently heading into down trend due to active grains productions on South America. On technical perspective, the ability for the market to recover on previous Wednesday was sighted as technical rally. Most of these rally is rather fast but would not last. To identify further short term weakness, traders are recommend to looked at 15 minutes bearish price formation, i.e: lower high and lower low candle patterns. For medium term perspective, hourly chart will be better time frame to identify market direction and it provide much more reliability on minimizing fake outs. For those who is not familiar trading using candle formation mentioned above as core strategy, you might want to check out the explanation below.
Candle formation is best use on medium term or generally know as swing trade, which will require you to hold overnight position when you able to get the first swing right. With your entry strategy, the first thing that you want be able to do is identify swing points. What's a swing point you ask? This is a pattern that consists of three candles. For entries on long positions, you look for a swing point low. For entries on short positions you look for a swing point high.
Swing Points
For a swing point low, the first candle makes a low, the second candle makes a lower low, and the third candle makes a higher low. This third candle tells us that the sellers have gotten weak and the stock will likely reverse.
For a swing point high, the first candle makes a high, the second candle makes a higher high, and the third candle makes a lower high. This third candle tells us that the buyers have gotten weak and the stock will likely reverse.
Here are pictures of the candles to help you better understand swing points:

graphic of swing points
I recommend plotting a higher low only when the price of the third candle exceed the high of the first candle, while the same goes for lower high, price has to breached below the low of the first candle. For conservative trade, a higher high and lower low will served as confirmation signal for late entry, most Sell Stop orders would be place below the low of the second candle for swing point low (Long positions) while Buy Stop order would be place above the high of second candle for swing point high (Short positions). Stay tune for more tutorial coming on next post.
Today, pivot support for the becnhmark Feb is located around 2,405 while resistance is pegged at 2,440 level.
Daily Pivot Point
R2=2451
R1=2440
S1=2417
S2=2405
 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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