Market Overview 14th Sept 2012

Friday, 14th Sept 2012. The FBM KLCI surge for the first time yesterday after it went for major correction since last week. Other news to follow.

"- U.S. stocks leapt Thursday, lifting the S&P 500 to its highest finish since 2007, after the Federal Reserve opted for a third round of quantitative easing to boost economic growth. Dow Jones Industrial Average DJIA +1.55%  , which rose more than 239 points before ending at 13,539.86, up 206.51 points, or 1.6%. That was the index’s highest close since Dec. 26, 2007. The S&P 500 Index SPX +1.63%  gained 23.43 points, or 1.6%, to 1,459.99, with financials pacing gains that included all 10 of the index’s major sectors. The Nasdaq Composite COMP +1.33%  added 41.52 points, or 1.3%, to 3,155.83, with iPhone maker Apple Inc.AAPL +1.97%   closing at a record high of $682.98 a share."

"-South Korean, Australian and mainland Chinese stocks slipped on Thursday as investors stayed cautious ahead of the Federal Reserve’s monetary policy decision later in the day.

Linus Yip, strategist at First Shanghai Securities in Hong Kong, said market expectations were running high that the Fed would unveil a third round of quantitative easing (QE3), although Yip himself was skeptical. China’s Shanghai Composite CN:000001 -0.76%  lost 0.5%, Australia’s S&P/ASX 200 indexAU:XJO -0.50%  dropped 0.4%, and South Korea’s Kospi KR:SEU +0.03%  slipped 0.2%. Japan’s Nikkei Stock Average JP:100000018 +0.39% climbed 0.6%, while Hong Kong’s Hang Seng Index HK:HSI -0.14% was little changed."

"- Oil rose to the highest price in four months on speculation economic stimulus measures by the U.S. will boost fuel demand and concern unrest in the Middle East and North Africa will disrupt supplies. Futures advanced as much as 0.8 percent, erasing their decline for the year. The Fed will make open-ended purchases of $40 billion of mortgage debt a month to boost the economy. Protesters attempted to storm the U.S. Embassy in Yemen and demonstrators marched in Egypt and Iran against a film seen as insulting to Islam. Iran is also raising tension by expanding its nuclear program, according to Robert Wood, the U.S. envoy to the International Atomic Energy Agency.

"-November Soybeans finished up 1 1/2 at 1747 1/4, 2 3/4 off the high and 14 1/2 up from the low. January Soybeans closed up 3 1/2 at 1748. This was 15 3/4 up from the low and 2 off the high. December Soymeal closed down 1.5 at 530.6. This was 4.3 up from the low and 2.8 off the high. December Soybean Oil finished up 0.53 at 57.01, 0.09 off the high and 0.69 up from the low. November soybeans traded slightly higher into the close while March soybeans rose sharply on the day. The higher trade in the 2013 contract months was linked to concern over drier than normal conditions in South America for soybean planting. The Federal Reserve announced midday that it would extend its quantitative easing program which sent the US Dollar sharply lower and added support to most commodity markets. Export sales were once again impressive this morning and fell in line with trade estimates. Total net weekly export sales came in at 628,200 tonnes and as of September 6th, cumulative soybean sales stand at 72% of the USDA forecast for 2012/2013 vs. a 5 year average of 36%. Total net soybean meal sales were reported at 217,600 tonnes. As of September 6th, cumulative soybean meal sales stand at 28% of the USDA forecast for 2012/2013 versus a 5 year average of 15%. Finally, total net soybean oil sales were reported at 15,200 tonnes. As of September 6th, cumulative soybean oil sales stand at 18% of the USDA forecast vs. a 5 year average of 9%."

FKLI- Recovering Mode Activated.

Equity index rose amid some bargain hunting yesterday after it was viciously tested by Bears previously and also some support from regional market. News regarding the Federal reserve chairman will proceed to submit their quantitative easing plan could help lift up the positive sentiment in the capital market currently. More monetary easing or any mean assets buying will boost the confidence of investors to keep their money on the financial market. But unfortunately, that was happening on foreign land, not on our own market. The equity index and index futures might their own agenda to move on. Local equity index would not always move based on external positive news or market condition, especially for short term (you might agree most market correlate on long term). At close, the FBM KLCI surge about 14.62 points to 1,628.40 while spot month contract for index futures recovered about 12.50 points to 1,618.50. For the mean time, index futures is poised to recover further based on hammer candle couple with a higher closed previously. This could explain that the  Selling pressure has exhausted, giving way for the Bulls to push back up the market. For medium term perspective, the battle for Bulls to turn this negative direction to positive are still far from over. Index futures has to climbed back above 1,530 next resistance level in order to identify any further upside for the coming week.

Daily Pivot Point
R2= 1632
R1= 1625
S1= 1606
S2= 1594

FCPO- Ranging Market Identified. 

CPO futures ended lower yesterday after it opened gap up on the opening bell. Most traders would not commit to Long at that high on the opening bell prior to Federal reserve meeting tonight as there is too much uncertainties surround this event. Much noise surround palm oil futures as Soy oil was hanging both on marginal losses and gains throughout yesterday Asia trading session. At close, the benchmark Nov went down about RM18 to 2,912, while Soy oil for Dec contract was traded slightly higher at 56.57 cents per pound. Technically, market is likely moving into a ranging period as the benchmark Nov was unable to breach previous Monday high at 2,948 plus there was no new low formed after the market recovered from 2,874 on previous Tuesday. With these price action shown on hourly chart above, the benchmark Nov is likely find support around 2,880~2,874 area while 2,948~2,950 will act as immediate resistance level. There  is no hard rules to trade in a ranging market, traders need to pay attention to both these significant level and trade against it. Example, go Short when the market approach or hit the resistance level, and at the same time put their protective stops above the resistance level. But if the market went down and hit the major support level, trade with extra caution as price is likely continue to head down based on current Bearish momentum. The Nov contract benchmark month will end on  6PM,14th Sept 2012, and the Sept contract will expire at 12PM. 14th Sept 2012.    

Daily Pivot Point
R2= 2972
R1= 2942
S1= 2888
S2= 2864

 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.