Short Covering On CPO After Sell Off 16th Nov 2012

Friday, 16th Nov 2012. Malaysia stock index continue to dive as investors concern on slowing global demand, and mounting uncertainties over U.S fiscal cliff. Other news to follow.

"- U.S. sto continued their recent losing streak Thursday, falling further from multimonth lows as investors gauged the economic impact of superstorm Sandy and the risk of going over the so-called fiscal cliff. A day after closing at its lowest level since June, the Dow Jones Industrial Average DJIA -0.23%  fell for the fourth straight day, shedding 28.57 points, or 0.2%, to close at 12,542.38. The index had been down as much as 0.6% earlier but pared losses in the last hour of trading.The S&P 500 Index SPX -0.16%  finished down for its third day in a row, declining 2.17 points, or 0.2%, to close at 1,353.32, with telecommunications pacing a slide that included 8 out of 10 major sectors. The Nasdaq Composite COMP -0.35%  closed in negative territory for the fourth day in a row, falling 9.87 points, or 0.4%, to 2,836.94."

"Politics worked to split stock performance in Asia on Thursday, with Japanese shares getting a lift from expectations for new elections, while China’s leadership change did little to boost shares, and U.S. political divisions dampened broad market sentiment.

Japan’s Nikkei Stock Average JP:100000018 +1.90%  gained 1.4%, but South Korea’s KospiKR:SEU -1.23%  fell 1.4%, and Australia’s S&P/ASX 200 index AU:XJO -0.89%  retreated 0.9%. Hong Kong’s Hang Seng Index HK:HSI -1.55%  dropped 1%, while the Shanghai Composite Index CN:000001 -1.22%  lost 0.6%, showing little reaction to the announcement of China’s new Communist Party leaders. The losses outside of Japan followed a sharp drop Wednesday on Wall Street, as renewed tension in the Middle East and worries about the U.S. “fiscal cliff” of potential tax hikes and spending cuts kept investors on edge."

"- Crude-oil futures fell Thursday, with investors worried about weak economic activity in the euro zone as well as wrangling in Washington over the looming fiscal cliff situation.

Crude oil for December delivery CLZ2 -0.06% fell 87 cents, or 1%, to settle at $85.45 a barrel on the New York Mercantile Exchange. Oil traded as low as $84.68, according to FactSet data."

"-January Soybeans closed down 17 at 1402. This was 1 up from the low and 25 3/4 off the high. December Soymeal closed down 5.5 at 430.5. This was 0.7 up from the low and 8.2 off the high. December Soybean Oil finished down 0.21 at 47.46, 0.71 off the high and 0.04 up from the low. January soybeans closed sharply lower and on the lows as late fund trader selling was noted as the market gave back all of yesterday's gains and more to close at the lowest level since late June. The market was higher in the overnight session but gains eroded and the market was already down into the mid-day. Demand side data has been supportive to the bull camp this week with NOPA crush coming in 8% higher against year ago levels and beating market estimates. The USDA announced that US exporters sold 32,000 tonnes of soybean oil to an unknown destination overnight for the 2012/13 crop year. This is the second sale in two days of soybean oil to an unknown destination. US soybean basis was steady to firm midday on strong export demand and slow farmer selling as futures continue their decline. Gulf basis was noticeably higher with added concerns over river closings. Additional pressure was linked to a favorable weather forecast for Brazil this week and next with showers expected to fall in the drier growing regions. Outside markets turned negative on the day after yesterday's terrible close in equities. Negative economic data out of the Euro zone and fiscal cliff fears in the US are forcing some traders out of the market, resulting in a risk off tone and lower trade. Traders see weekly export sales near 400,000 tonnes from 191,900 tonnes last week."

FKLI- The Bears Are Still In Control. 

Trading less this week as Bursa Malaysia is closed for one day holiday on previous Tuesday and Thursday, stock index retreated about 5.91 points to 1,631.68 while Nov contract went down about 7 points to 1,624.50 level, the day high and low for spot month contract was 1,635~1,621 respectively. Volume for the spot month index futures also recorded higher to 7,563 compare to previous Monday 3,793. Apart from global slowdown concern, long holiday is also part of the reason why traders stay off from the market, closing their position prior to any holiday. The price action we seen so far suggest that the Bears are still in control on current short term direction. Market has tanked for about seven sessions and worse off there is yet any promising sign for the market to recover.  Even though the index futures has dipped about 3.5% from the previous top at 1,678 level, medium term perspective still suggest that this would be another swift correction after the market has rally for five weeks previously. For today, pivot point support for Nov contract is located around 1,612 while resistance is pegged at 1,640.

Daily Pivot Point
R2= 1640
R1= 1632
S1= 1618
S2= 1612

FCPO- Likely Surged On Improved Demand And Soy Oil Recovery

Palm oil futures rose better than expected on previous Wednesday before the market closed on Thursday for public holiday. Much of the relation for this recovery came from improved export figures reported by both SGS and ITS cargo surveyors and market participants are also expecting more demand to pick up towards year end before the new export tax policy enforce early next year. Palm oil shipping will increase on oversea refineries prior to the duty free CPO export quota discontinue next year. At closed, the new benchmark Feb ended RM95 higher to 2,461, finishing just below RM12 from the top of the day. On the surface, the benchmark month manage to recovered swiftly after it breached above certain resistance level on Wednesday and it did not stop until it hit the day high at 2,473. Traders are reminded that these rally may not last long as most recovery made while the medium term price action is Bearish are likely turn out to be technical rebound. Most of this temporary rebound came from collateral Short covering which occur when Short holders closed off their positions and at the same time market will rally if the previous Short holders turn his positions to Long. For today, pivot support level for benchmark Feb is located around 2,396 while resistance is pegged at 2,537.

Daily Pivot Point
R2= 2537
R1= 2499
S1= 2396
S2= 2331
 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.