Monday, December 15, 2014

FCPO: Painful Range 16th Dec 2014

Tueday, 16th Dec 2014. Palm oil futures end slightly lower yesterday despite some recovery made on Soy oil on Asia trading session. It does not look like decouple but better be alert than sorry. Other news to follow.

"-The U.S. stock market ended Monday’s volatile session lower, as an unabated fall in oil prices continued to erode investor confidence. Traders attributed wild swings in the indexes to a combination of factors, including ‘quadruple witching’ event — the week during which various index futures and options expire, unwinding of large positions by funds and uncertainty surrounding crude oil prices which resumed their slide after a brief rebound. The initial bounce in oil ahead of the regular market open prompted a rally in European stock markets. But as crude fell to new lows, the mood turned gloomy, with major exchanges finishing lower. Dow Jones Industrial Average DJIA, -0.58%  jumped more than 100 points shortly after the market open but ended 100 points, or 0.6%, lower at 17,180.84. The S&P 500’s SPX, -0.63% traded in a 29 point range, but ended 12.60 points, or 0.6% lower at 1,989.63. Utilities and financials were the biggest decliners, while all 10 sectors finished with losses. The energy sector began the day sharply higher, but ended 0.8% lower."


"- Japanese stocks tumbled Monday to their lowest level in four weeks, tracking U.S. losses at the end of last week. The Nikkei Average NIK, -1.72%  declined 1.6% to 17,099.40, its lowest settlement since mid-November. The broader Topix I0000, +0.03%  ended down 1.5%, with the yen USDJPY, +0.07%  rising to ¥118.27 against the dollar from ¥118.83 in the prior session. On Monday, the quarterly tankan survey by Japan’s central bank showed the country’s manufacturers are becoming more cautious about the future. Earlier, Prime Minister Shinzo Abe’s ruling coalition won a majority in the parliamentary elections on Sunday. Most other major Asian markets also suffered losses. Hong Kong’s Hang Seng IndexHSI, -0.95%  lost 1%, extending a three-day losing streak, as a research report from China’s central bank projected the country’s economic growth could decrease to 7.1% next year on slowing property investment. In Sydney, the S&P/ASX 200 XJO, -0.35%  finished down 0.6%, while Seoul’s Kospi Composite Index SEU, -0.61%  dipped 0.1%. However, on mainland China, the Shanghai Composite Index SHCOMP, +0.52%posted modest gains, settling 0.5% higher."

"- Oil bears have had a lot to be joyous about since midyear but it might just be the season to start booking profits on those short bets, Deutsche Bank’s top asset allocation strategist said Monday. In a note, Deutsche Bank’s chief strategist Binky Chadha identified three factors that had led Deutsche to recommend short positions back in June. Those three factors that earlier supported making betting that crude oil prices are on the decline now argue for short covering, he said. Here they are:The overvaluation gap has closed: In June, oil prices were 45% above fair value. Now, even though fair value for New York Mercantile -traded, WTI crude oil has dropped from around $80 to $58 thanks to a sharp rise in the dollar, the large fall in oil futures CLF5, -0.66%  have closed the overvaluation gap (see chart at top of page), Chadha noted. Nymex WTI futures closed Monday at a five-year low of $55.91, down more than 48% from its June high near $107 a barrel."


FCPO- Still Going Nowhere For Trend


Palm oil futures is not making any good sign yet in terms on running on any trend. Less and less sign of where it is going to head next. Export for 1-15th Dec vs Nov 2014 was reported slightly positive with just about 2% to 3% higher. Put the news aside, most of us know medium to long term traders are having very hard time since November 2014 which there is no promising trend to ride. Market quickly return to stubborn range when it hit new high or new low, and it kept repeating this incident more than sixth times in a row. Who to blame ? I rarely sees this is anyone's fault but rather unavoidable market condition that can occur over and over again without us knowing it early on. There is no way to tell either any of the trend trades would work or not, you would just have to execute it and find out. The only we can reduce or minimize losses within this ranging market would be not to trade at all or being super picky about taking a trade and trade significantly less. Other way would be waiting for more confirmation such as going into the trade later than usual, but that also would not stopping any trader from getting losses. A successful trade will be how well that trader can exploits the market condition at that particular time and execute his/her plan due diligently. Back to palm oil futures outlook, we are still travelling within a flexible range within 2,300 and 2,100 for the moment. I doubt the benchmark month would move with conviction after it hit a new high or new low for this year. We will be likely looking at no strong movement throughout until Jan or Feb next year.  For today, pivot support for the new benchmark March will be 2,149 while resistance is pegged at 2,183.

Daily Pivot Point
R2= 2203
R1= 2183
S1= 2149
S2= 2135
 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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