Commodities Futures Sell- Off 19th Sept 2012

Wednesday, 19th Sept 212. Palm oil futures went Sell-off frenzy when it resume to trade yesterday, Soy bean products and other major commodities also had a huge dropped beginning of this week.

"-Most U.S. stocks slipped for a second day with the Dow industrials posting a fractional gain Tuesday as a gauge of home-builder sentiment showed improvement in September and shipper FedEx Corp. reduced its profit forecast. On Tuesday, the S&P 500 index SPX -0.13%  shed 1.87 points, or 0.1%, to close at 1,459.32, with energy the hardest hit and consumer staples the best performer of its 10 major sectors. Similarly, the Nasdaq Composite COMP -0.03%  declined 0.87 point to close at 3,177.80. The Dow Jones Industrial Average DJIA +0.09% , however, gained 11.54 points, or 0.1%, to close at 13,564.64."

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"-Most Asian markets fell Tuesday as concern about the fallout from a territorial dispute between regional economic giants China and Japan dragged further on investor sentiment, with several auto makers stocks among those falling. The Shanghai CompositeCN:000001 -0.91%  dropped 0.9%, stretching its losing streak after tumbling 2.1% the previous day, while Japan’s Nikkei Stock Average JP:100000018 -0.39%slipped 0.4% as trading resumed after Monday’s holiday. Hong Kong’s Hang Seng IndexHK:HSI -0.27%  declined 0.3%, Australia’s S&P/ASX 200 AU:XJO -0.18% eased 0.2% and Taiwan’s Taiex lost 0.4%, while South Korea’s Kospi KR:SEU +0.13% ended 0.1% higher."

"- Crude-oil inventories rose by 2.4 million barrels on the week ended Sept. 14, a trade group said late Tuesday. The American Petroleum Institute also reported gasoline stockpiles up 135,000 barrels, and supplies of distillates down 1.1 million barrels. The API report comes a day ahead of the more closely watched data from the Energy Information Administration. An EIA report along these lines would be likely bullish for oil prices. Analysts polled by Platts expect an increase of 2.5 million barrels for crude supplies, while gasoline and distillates inventories are seen up 1 million barrels each. Oil CLV2 +0.17% ended lower on Tuesday, off 1.4% to settle at $95.29 a barrel, its lowest in nearly three weeks. "

"-November Soybeans finished down 29 at 1640, 29 off the high and 9 1/2 up from the low. January Soybeans closed down 30 3/4 at 1639 1/4. This was 7 1/2 up from the low and 32 1/4 off the high. December Soymeal closed down 13.4 at 492.0. This was 1.8 up from the low and 12.6 off the high. December Soybean Oil finished down 0.06 at 55.33, 0.39 off the high and 0.61 up from the low. Reports of better than expected soybean yields in areas of the US Corn Belt along with weaker cash markets in the interior of the US triggered long liquidation for the second day in a row. November soybeans ended the day sharply lower and losses were extended to soybean meal and oil. A slightly wetter forecast for central and northern Brazil later this week added to the negative influence. The rapid pace of maturity of the soybean crop along with the steady harvest pace has prompted heavy cash soybean movement in the short term which added to weaker trade for futures. Cash bids in the Gulf of Mexico were steady to firm on the day due to better export demand after the recent slide in prices. Early support in soybeans was linked to rumors that Taiwan bought US soybean cargos overnight however no confirmation of the trade has been made. The US Dollar traded slightly higher on the day which added pressure to most commodities."

FCPO- Break Down Below Major Support Level. 

There is no denying that trading futures or anything that involve leverage on any financial instrument in the market require vast knowledge in controlling risk. If you are holding some Long positions when the market resume too trade yesterday, it will be fair to say that your position will be bleeding hard that moment. Nonetheless, what is more matters to do at that time was figuring out whether you should stop the wound or bleeding by cut the losses or let it be. Given the situation when the market open gap down yesterday, it would be less wise to let your Long positions hold until the benchmark Dec breach below the major support level around 2,870. The best way to deal with huge cut loss when you are in deep unfavourable positions were to evaluate the available information you have at that time. Ask yourself this question, has the market breach any of the pivot support or resistance level, what is the preceding market trend, and ultimately is my cut loss or exit criteria met, if all these answers were YES, then you there is an obligation for you to obey your trading rules and cut the losses and turned the position if you have a entry signal. That is how trading is done and how discipline traders re-act to every situation on the market. Not just second guessing them-self and wonder what to do next, a discipline trader tend to think in a systematic way, like a flow chart.
Yesterday, the benchmark Dec dipped about RM125 tor4.19% to 2,861, the day high and low was 2,894 and 2,827 respectively. Volume for the benchmark expanded substantially to 28,982 lots and so does open interest as well. Technically, further downside is expected to occur today as the benchmark Dec has breached below major support level around 2,870 level yesterday. And together with higher volume and open interest accompany this Sell-off, the Bears will likely restricting any major recovery at the moment unless there was some nice surge on Soy bean or oil due to recent oversold condition. But that are less likely to happen as favourable weather condition are aiding Soy bean early planting and easing concern over diminishing edible oil supplies. For today, pivot point for support level is located around 2,793 while resistance is pegged at 2,894.

Daily Pivot Point
R2= 2927
R1= 2894
S1= 2827
S2=2793
 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.