Wednesday, December 12, 2012

A Temporary Rebound After A Sell Off ? 13th Dec 2012

Wednesday, 13th Dec 2012. The palm oil futures succumb to weakness as stockpiles build up highest in the history. Other news to follow.

"-U.S. stocks finished little changed Wednesday after Federal Reserve Chairman Ben Bernanke warned the Fed does not have the ability to shield the economy from the fiscal cliff. Halting a five-session winning run, its longest since March, the Dow industrialsDJIA -0.02%  declined 2.99 points to 13,245.45. The S&P 500 Index SPX +0.04%  retained a 0.64-point gain to end at 1,428.48. The Nasdaq Composite Index COMP -0.28%  fell 8.49 points, or 0.3%, to 3,013.81."

"- Asia markets rose Wednesday on sustained optimism U.S. lawmakers will act in time to avoid tax hikes and spending cuts from automatically kicking in next year, with Australian and Hong Kong stocks ending at 16-month highs. Japan’s Nikkei Stock Average JP:100000018 +0.59%  rose 0.6%, China’s Shanghai Composite index CN:000001 +0.39% climbed 0.4% and Taiwan’s Taiex XX:Y9999 +1.00% added 1%. South Korea’s Kospi KR:SEU +0.55% advanced 0.6%, overcoming news of North Korea’s launch of a long-range rocket that briefly weighed on local stocks.  Australia’s S&P/ASX 200 index AU:XJO +0.17%  added 0.2% for its highest finish since July 2011, while Hong Kong’s Hang Seng Index HK:HSI +0.80% gained 0.8%, ending at a level it hasn’t seen since August 2011."


"- Crude-oil futures finished higher Wednesday, but below the day's best level, following the U.S Federal Reserve's decision to launch a new bond-buying program. January crude oil CLF3 -0.08%rose 98 cents, or 1.1%, to settle at $86.77 a barrel on the New York Mercantile Exchange. It rose to as high as $87.68 during the session."

"-January Soybeans finished up 1 1/2 at 1473 1/2, 5 1/4 off the high and 16 1/4 up from the low. March Soybeans closed down 3/4 at 1470 1/2. This was 15 1/4 up from the low and 5 1/2 off the high.
January Soymeal closed up 3.9 at 452.0. This was 9.0 up from the low and 1.7 off the high. January Soybean Oil finished down 0.66 at 49.54, 0.89 off the high and 0.04 up from the low. January soybeans traded slightly higher on the day but forward contracts ended the day in negative territory due to weakness in the peripheral grain markets. Strong end user demand continues to support the complex and rumors continue to circulate that China has secured additional cargos on this week's dip in prices. The market expects another impressive showing from the export sales report tomorrow as well as NOPA crush on Friday. Brazil weather remains favorable at the moment which supports good growing conditions for the soybean crop. Some suggest that if there are no major disruptions in the December weather pattern, production has the potential to be greater than the estimated 81 million tonnes. Argentina is expected to see a drier period over the next 7-10 days which should improve planting progress. Corn planting remains behind schedule which is helping support the theory that more acreage has already been shifted to soybeans. Basis was firm across the Corn Belt and in the Gulf of Mexico due to slow farmer sales and strong crush and export demand."
FKLI- Recovered Above Half Of Previous Sell-Off

Stock index manage to record another gain yesterday amid some accumulation activity on plantation counter and financial counters as well. Now, do not relate the plantation sectors with the price on palm oil futures as they does not, in any way relate to the price action in short term. The recovery phase has rally beyond what it know as temporary rebound. When there an indication or candle formation that suggested a rebound or correction would take place, there is no telling how much the price could rally or retrace. Similarly when I mentioned market is about continue recovering due to Bullish candle formation and based on certain pivot resistance level or previous high is taken out, I would not know where does the recovery will stop unless there is another candle formation that suggest it is about to stop. And based on my observation so far on index futures, market recovery is yet come to halt as there is no sign for any Bearish candle formation yet. Minus the uncertainty on regional index and local general election rumours,  the Bulls are still in charge as there is no lower high formed yet based on hourly chart. On contrary  we might be looking at further weakness if the index futures did not make any new high today. Pivot support for Dec contract is located around 1,647 while resistance is pegged at 1,658 level.

Daily Pivot Point
R2= 1663
R1= 1658
S1= 1647
S2= 1642

FCPO- Bargain Hunting Steps In On Evening Sessions

Palm oil futures gaped own lower yesterday on morning session as mounting concern over record high palm oil stocks level escalated along with recent weakness in Soy oil futures. Soy oil correction was likely the catalyst for the palm oil futures to open gap down yesterday. Everyone is just waiting for the market to open and start Selling after the market breached below previous weekly support around 2,280~2,278 and also the support trend line of the descending triangle. At close, the benchmark Feb loss about RM53 to 2,238, the day high and low was traded within 2,266~2,229 level. Hell does break lose when the Feb contract opened gap down from 2,287 to 2,263 and it went down till 2,229 level, forcing most Long holder to cover their positions. The benchmark Feb ended on where it open in the morning session when bargain hunting activities swarm the market an hour before the market close, but it does not change the Bearish outlook entirely. Market is still susceptible to retrace further soon as it has breached below the support trend line on descending triangle shown on daily chart above. Major monthly support will be place around 2,225~2,220 area. All hopes of medium term market recovery will be greatly diminish if the benchmark Feb manage to breach below this level. Similar to the post on FKLI, price is expected to fall further especially after some Bearish candle formation formed plus the extermination of important support level. For today, pivot support for the  benchmark Feb is located around 2,222 while resistance is pegged at 2,259.

Daily Pivot Point
R2= 2281
R1= 2259
S1= 2222
S2= 2207
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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