FCPO: Higher Low Formed, Rally Resume 20th March 2014

Thursday, 20th March 2014. Palm oil futures recover above 2,780 level yesterday amid positive price action from Soy oil during Asia session. Other news to follow.

"-U.S. stocks dropped and bond yields surged Wednesday after Federal Reserve chairwoman Janet Yellen said that rate hikes could happen about six months after the Fed wraps up bond purchases. The S&P 500 SPX -0.61%  fell 11.48 points, or 0.6%, to 1,860.77, most of the losses coming after the comment from Yellen during the press conference. The Dow Jones Industrial Average DJIA -0.70%  dropped 114.02 points, or 0.7%, to 16,222.17. The Nasdaq Composite COMP -0.59% shed 25.71 points, or 0.68%, to 4,307.60. The FOMC decided to trim the bond purchases by another $10 billion this month and changed the way it targets unemployment and inflation in deciding short-term interest rates."

"- Stocks in Japan and Hong Kong slipped as investors nervously awaited for the West’s response to Crimea’s vote to break away from Ukraine and join Russia, which has drawn international condemnation. Stock markets across Asia Pacific were mixed after the referendum Sunday in Crimea, the latest development in the volatile region, amid rising worries over another possible military incursion into Ukraine by Russia. Tensions there have weighed on global markets in recent weeks. Japan’s Nikkei lost 0.4%, while Australia’s benchmark S&P ASX 200 shed 0.2% and South Korea’s Kospi gained less than 0.2%. In China, the Hang Seng Index in Hong Kong lost 0.4% and the Shanghai Composite was flat.

In commodities, spot gold rose as much as 0.7% in early Asian trade and was last flat at $1,381.60 an ounce. Nymex natural gas futures added 1.4% to $4.49 per British thermal unit due to supply concerns. Europe gets around 30% of its gas from Russia."

"- Treasury prices fell sharply Wednesday after the Federal Reserve said it would shift its method of saying it would keep rates low by considering a wide range of factors in deciding when to raise its key policy rate. The central bank also said it would continue cutting its bond-buying stimulus program, as expected. After the announcement, the benchmark 10-year Treasury note yield, which rises as prices fall, was up 7.5 basis points on the day at 2.753%. The 5-year note 5_YEAR -0.58% yield surged 12 basis points to 1.670%, and the 3-year note3_YEAR -0.34% yield jumped 10.5 basis points to 0.862%. The 30-year bond 30_YEAR -0.38% yield rose 4.5 basis points to 3.671%."

FCPO- Further Rally Likely

This could be the hint to resume previous uptrend, a higher low has formed on daily chart. Now, some traders might not agree with me as it maybe too early to consider yesterday rally as the higher low we are all waiting for. Chances come and go each time prices re-act to information and traders action, with yesterday recovery it is a strong indication this could be the higher low we are all waiting for, at least for my case. Traders who missed out their Long position can take this opportunity to go Long at around yesterday closing price, 2,780 level. Yes, you heard me right, Long at the yesterday high. I cannot guarantee you yesterday recovery will brew another rally this week, but this is the indication that you would not want to miss out. As always, not all trend are straight forward, palm oil price are still threaten by current weak demand from India and China due to higher price. Those major palm oil and Soy oil importers are cutting down their cargoes for the upcoming shipment in April and May. But if the market can overcome that short fall, maybe with lower than expected production, palm oil price will remain Bullish in the long run. From technical aspect, it is an early sign for the benchmark Jun to rally judging from yesterday recovery. Even though a higher low has formed, palm oil price can turn back into crappy sideways action if the benchmark Jun retrace below 2,750 level. For today, pivot support for Jun contract is located around 2,760 followed by 2,742 while resistance is pegged at 2,791.

Daily Pivot Point
R2= 2804
R1= 2791
S1= 2760
S2= 2742
 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.