Tuesday, September 18, 2012

CPO- the slide continued

CPO broke below the horizontal support of RM2800 today (see Chart 1). This breakdown was not due to a last-minute selldown. The breakdown happened at the start of the morning trading and it went as low as RM2683 before it rebounded to close at RM2714 (see Chart 2). CPO's immediate support levels are at the horizontal line at RM2700 & then at RM2400.

Chart 1: CPO's daily chart as at September 18, 2012 (Source: iFS.marketcenter.com)

Chart 2: CPO's 30-min intra-day chart as at September 18, 2012 (Source: iFS.marketcenter.com)

The continued slide in CPO (after the breaking below its long-term uptrend line) should be followed by similar breakdown in the Plantation index. Looking at Chart 3 below, the immediate support for the Plantation index is at 8000 but the stronger support is at 6500-7000. If this index drops to the 7000 mark, this would translate to a drop of 12-13% for plantation stocks.

Chart 3: Plantation index's weekly chart as at September 18, 2012 (Source: tradesignum)


Imoogi said...

Alex, the CPO chart you show is actually on the Oct 2012 contract which is going to expire soon and having a very low volume trade. The active month now is Dec 2012 and Nov 2012 contract is the next active one and lots of player will be rolling over from Nov 2012 contract to Dec 2012 contract.
No doubt it is bearish now, but comparing non active month contract to see the market sentiment may not be right. You may want to look at CPO continuous chart which automatically roll over to the new contract on around the 15th of each month.

Alex Lu said...

Hi Imoogi

You may have a point there. The reason is simply the settlement price for Oct, Nov & Dec contracts were RM2714, RM2803 & RM2861 yesterday. However, this chart should not be based on the earliest expiring contract. Even if that is the case, the fact that the price of the expiring contract breaking below the price of expiring contract in the past few months is a bearish sign.

Ivan said...

Hi Alex,

KLCI mainly support by plantation and finance sector. Despite plantation index temp negative, will the negative sentiment affect KLCI as well?

Where will we (Klci) are despite DJIA just broke up the 3 years high level, 13k?