Wednesday, January 15, 2014

FCPO: Still A Long Way To Go Down, Rebound Anyone ?

Wednesday, 15th Jan 2014. Palm oil futures continue to head south despite numerous Bullish divergence shown on hourly chart oscillator. Other news to follow.

"-U.S. stocks rallied to their best day of the year Tuesday as investors welcomed stronger-than-expected retail sales, got a boost from Google Inc. and Apple Inc., and absorbed earnings results from J.P. Morgan Chase & Co. and Wells Fargo & Co.

The S&P 500 SPX +1.08%  closed 19.68 points, or 1.1%, higher at 1,838.88, with the technology sector leading broad-based gains. The Dow Jones Industrial AverageDJIA +0.71%  rose 115.92 points, or 0.7% to 16,373.86, breaking a four-session losing streak. The Nasdaq Composite COMP +1.70%  gained 69.71 points, or 1.7% to 4,183.02 and turned positive this year with a gain of 0.15%, according to FactSet data.
"-Shanghai stocks ended lower on Friday, on a mixed day for Asian markets, after growth in Chinese exports in December showed a marked decrease from the month before. The Shanghai Composite CN:SHCOMP +0.86% lost 0.7%, though Hong Kong’s Hang Seng Index HK:HSI -0.43%  rose 0.3% as short-sellers were forced to cover their positions after the export number came out broadly in line with expectations."
"-Oil futures closed back above $92 a barrel on Tuesday, buoyed by expectations for a weekly decline in U.S. crude supplies as a rise in retail sales helped lift the energy-demand outlook. Natural-gas prices extended their rally into a third-straight session on predictions for a hefty weekly supply drawdown. Crude oil for February delivery CLG4 -0.01%  added 79 cents, or 0.9%, to settle at $92.59 a barrel on the New York Mercantile Exchange."

FCPO- Hope For A Rebound ? Read On.

First off, let's look at the news on Soy. Global inventories of soybeans may be 71.46 million tons, more than the 70.62 million tons estimated by the U.S. Department of Agriculture in December, a Bloomberg survey showed. That may boost supplies of soybean oil, which competes with palm for use in food and fuel. This news alone means more weakness for Soy oil, and palm oil need to dropped even further to narrow down their discounts. If you are hoping for a rebound and worse off you are holding a Long position, that hope could into a disaster day after day. Even though there are few sign of Bullish divergence from oscillator that may also suggest it is way oversold, but this reading can stay there for a numbers of days before the benchmark price would start to recover. By that time, your equity would be inadequate to hold off the price fall or even margin call. The likely result you would do, would be closing off your Long position whether by you or your broker with force sell effect. And of course the next day or next hour, the market rebound. Point is, a savvy trader always has his risk management defined. Hope and fear would not be a factor list into their trading scheme. A successful trader has to execute their plan or trade setup couple with risk management over 95% efficiency. Doubt will follow if that particular trader does not work with 95% efficiency. Technically, overall palm oil market is still Bearish, it may get even worse as the benchmark March has pierced below long term support trend line shown on daily chart above, gods knows where this price action would lead us. Some would even agree this particular price action look identical to head and shoulders chart formation. Well, we do not need to wait for a head and shoulders chart pattern to tell that market is weak. Commodities price always surprises any new and seasoned trader, so do not even think about hoping for the price to go into your favor when your position gone bad. For today, pivot point support for March contract is located around 2,458 while resistance is pegged at 2,521.

Daily Pivot Point
R2= 2548
R1= 2521
S1= 2476
S2= 2458
 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.


Post a Comment