Market Overview 24th Feb 2012

 Friday, 24th Feb. The FBM KLCI edges lower yesterday together with most regional index performance that ended weaker as well. Other news to follow. 

"-U.S. stocks rose Thursday, with the S&P 500 ending near a 10-month high, after reports cast a favorable light on the economy, offsetting Hewlett-Packard Co.’s disappointing outlook and lifting the major indexes into positive turf for the week. After falling as much as 56 points, the Dow Jones Industrial Average DJIA +0.36%   ended up 46.02 points, or 0.4%, to 12,984.69, a new 52-week high and its highest close since May 19, 2008. The S&P 500 Index SPX +0.43%  added 5.80 points, or 0.4%, to 1,363.46, its highest close since April 29, with financial firms gaining the most among its 10 major sectors. Only utilities fell. The Nasdaq Composite COMP +0.81%  rose 23.81 points, or 0.8%, to 2,956.98."

"-Asian stocks markets finished mostly lower Thursday, with many of the region’s banks under pressure, though Japan’s main indexes swung to gains as exporters strengthened.The South Korean Kospi Index KR:0100 -1.03%  lost 1%, Australia’s S&P/ASX 200 index AU:XJO -0.16%  slipped 0.2%, Hong Kong’s Hang Seng Index HK:HSI -0.78%  dropped 0.8%, while the Shanghai Composite index CN:000001 +0.25%  edged up 0.3%. Japan’s Nikkei Stock Average JP:NIK +0.39% rose 0.4%, erasing early-session losses as exporters once again benefitted from a weak yen. U.S. stocks ended broadly flat on Wednesday, bringing a three-session run of gains to an end, as investors reacted to weak results from a survey of euro-zone business activity."

"- Crude-oil futures rallied Thursday to end at their highest level since May as a weekly government report showed a smaller-than-expected rise in inventories and the dollar traded lower throughout the day. Crude for April delivery CLJ2 +0.58%  rose $1.55, or 1.5%, to settle at $107.83 barrel on the New York Mercantile Exchange. Oil has ended higher for seven out of the past eight sessions."

"-US soybean futures rally to new five-month highs, fueled by technical buying and strong underlying export demand. The soybean market is in the midst of a bullish uptrend, a feature attracting buyers in the absence of bearish news. Export demand continue to fuel positive momentum, with the uncertainty of South American production and weakness in the US dollar serving as supportive influences on prices, says Chad Henderson, analyst with Prime Ag Consultants. The need for soy prices to remain competitive with corn and cotton to secure enough 2012 acres to maintain adequate supplies buoyed prices as well. CBOT March soy ended up 4 1/2c to $12.76 3/4/bushel. Soy product futures end mixed, with soymeal garnering support from traders taking profits on long soyoil/short soymeal spreads. The markets consolidated from recent spreading action, as traders shed risk before the end of the month, analysts say. CBOT March soymeal ended up $1.60 to $332.90/short ton, and March soyoil finished down 0.02c to 54.20c/lb. "

FKLI- Taking Some Breather 

 Stock index closed lower yesterday as most investors choose to remain at the sideline after previous week accumulation activities that brought the stock index to year high. If you remember , This rallies have lasted for at least four months now after it made a swift correction from 1,600 peak to 1,300 level last year. The point is, market does need some breather in order to create a healthy retracement and draw more accumulation activities when the index starting to hover lower. This action will create the next higher lows couple with higher highs and gradually it could took both index to breach previous historical high. Unfortunately, the problem in any trending market is we do not know how bad the correction (or pullback in downtrend) could turn to be, the only hint we have is by looking at the support trend line, and various important support level and so on. One of the barometer we can always use (in any market condition) is by looking at the candle formation. Usually the first sign of lower high formed on hourly chart is an early indication that the Buyers is losing strength gradually, while the first sigh of lower high in daily chart is a strong indication that the market is falling its positive momentum. For the uptrending market to reverse its role, it will took a series of lower high and lower lows in hourly chart and the formation of lower high plus lower low in daily chart for further Bearish momentum. For today, support is located at 1,554 while resistance is pegged at 1,564.

Daily Pivot Point
R2= 1564
R1= 1561
S1= 1554
S2= 1550.50

 FCPO- Mild Retracement Expected.

CPO futures defies most resistance level and closed higher yesterday as investors sentiment improved right after Soya oil futures topped above 54 cents per pound. It was not a straight recovery as palm oil futures spend most of its time hovering within 3,255~3,265 throughout the trading session before it start to move constantly higher five minutes before the closing bell. As a result, the benchmark May rose RM22 to 3,272, closing just one point off the high. Technically, the benchmark May have retrace 50 points right after it hit 3,300 level which happen on past Wednesday. Next market recover slightly today but did not make a new high. Even though the Soya oil rose 0.05 cents to 54.27 cents per pound during the end of Asia trading session yesterday, we suspect that the Bulls might be losing some steam at the moment judging from the failure to recover on par with previous Wednesday high. Hence, market is poised to retrace further if the benchmark May could breach below today's second pivot support level around 3,236. Keep in mind that the medium term uptrend is still intact, substantial corrections are likely due to massive profit taking ahead of tomorrow weekend.   

Daily Pivot Point
R2= 3290
R1= 3281
S1= 3254
S2= 3236
 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.