Market Overview 21st May 2012

Monday, 21st May 2012. The FBM KLCI resume its Bearish performance, finishing substantially lower last week amid recent concern about Greece financial crisis and the possibilities for that country to leave European Union. Other news to follow.

"- Stocks fell on Friday after a sloppy debut by Facebook Inc (FB.O) spoiled hopes that a spectacular open for the most-anticipated stock sale in years would brighten the mood in what has been a gloomy month for equity markets. The Dow Jones industrial average .DJI dropped 73.11 points, or 0.59 percent, to 12,369.38. The Standard & Poor's 500 Index .SPX lost 9.64 points, or 0.74 percent, to 1,295.22. The Nasdaq Composite Index .IXIC fell 34.90 points, or 1.24 percent, to 2,778.79.

For the week, the Dow fell 3.5 percent, the S&P 500 declined 4.3 percent and the Nasdaq was down 5.3 percent."

"-Asian stocks plunged on Friday as fresh fears about Spanish banks added to existing worries about capital flight from Greek lenders, wiping out hundreds of billions of dollars in the region’s market capitalization. Japan’s Nikkei Stock Average JP:100000018 -2.99%  fell 3% during the session to take losses for a seventh straight week. South Korea’s Kopsi index KR:SEU -3.40%  dropped 3.4%, Australia’s S&P/ASX 200 indexAU:XJO -2.67%  skidded 2.7%, China’s Shanghai Composite index CN:000001 -1.44%  lost 1.4% and Taiwan’s Taiex XX:Y9999 -2.79%  stumbled 2.8%. Hong Kong’s Hang Seng IndexHK:HSI -1.30%  dropped 1.3%, ending well off the day’s low but still clinching its 11th loss in 12 trading days, and following in the footsteps of U.S. equities. The index is now among the worst performing in the region so far this month, having lost 10.2% of its value."


"-July Soybeans finished down 33 at 1405, 33 3/4 off the high and equal to the low. November Soybeans closed down 18 1/2 at 1288. This was equal to the low and 29 1/2 off the high. July Soybean Oil finished down 0.4 at 50.32, 0.52 off the high and 0.29 up from the low. July soybeans sold off sharply today but still managed to close 1cent higher on the week. Funds were noted as unwinding long soybean short wheat and short corn spreads, and this helped support the other grains and pressure soybeans. November soybeans stayed in a choppy range into mid-session, as the market seemed to find support from the dry weather forecast, but a new round of selling emerged this afternoon, which send the market sharply lower. The jump in wheat provided some early support, but the market drifted lower to trade moderately lower on the session into the mid-session. Further weakness in China and ideas that the China economy may suffer short-term with so much uncertainty coming out of Europe has helped to spark some long liquidation selling recently, and news that China plans to offer 600,000 tonnes of soybeans from state reserves next week which could help to slow the short-term import demand helped to limit the advance. Ideas that the rally yesterday was a bit overdone added to the negative tone. July meal pushed sharply lower after surging to its highest level since May 2nd yesterday, while July oil pushed moderately lower, to its lowest level since December 16th to 50.03 before a bounce off of the lows. Traders believe there needs to be some progress in Europe over the weekend and early next week, otherwise macroeconomic weakness could continue to pressure the market next week as well."

FKLI- No Chance For Bulls

There was no sign for the stock index to recover yet as market is still hovering on negative momentum plus Greece financial crisis that is likely get out of control. Regional stock indexes also closed lower due to global economy slowdown worries especially on China, U.S and bad economy data backed that up. On previous Friday, the FBM KLCI closed 11.75 points lower to 1,532.46 while index futures went down about 7.50 points to 1,526.50. Although most of the traders would guess market should be have bounce back due oversold condition, but there is no sign for that recovery yet when the May contract continue to dipped on previous Friday. Technically, we are going to see further sell-off after the index futures breach below important support trend line. With successive lower highs and lower lows formed, this Bearish direction is far from over. For today, support is located around 1,512 while resistance is pegged at 1,535.

Daily Pivot Point
R2= 1535
R1= 1531
S1= 1519
S2= 1512

FCPO- Massive Sell-Off 

CPO futures closed unchanged on previous Friday but much damaged have been done for over three weeks. Palm oil prices have dipped more than 10% due to global commodities prices meltdown plus shocking huge Long liquidation by hedge fund company to mitigate risk. Most of the investors may think that the commodities prices have peaked out and it might be impossible for demand to picked up due to global economy growth concern. Not only we have sharp decline on palm oil prices, other commodities such as gold, crude oil and equity market were also effected by Greece exit from Eurozone. Palm oil futures need some positive news to closed higher, else we might witness another correction if there is no progress on Greece  financial trouble.  Technically, the benchmark Aug manage to bounced off from the 5 months low when it hit 3,034 level but the weak price action is far from over. It is still possible to have another round of Sell-off as there is no promising sign of recovery yet. The benchmark Aug need to breach above the first resistance trend line shown on hourly chart to attract more Buyers and if we are lucky enough, the market might closed higher if there is Short covering in the end of the trading session. For today, judging from its weaker overnight closed  on Soy oil futures, palm oil futures is likely open lower continue to track the performance. For today, support is located around 3,004 while resistance is pegged at 3,126.

Daily Pivot Point
R2= 3156
R1= 3126
S1= 3050
S2= 3004
 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.