This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Tuesday, October 23, 2012
CPO- forming a base
CPO has rebounded after traded below RM2200. The major catalyst for a more positive outlook for CPO is the recent reduction in the export duties of CPO from the current 22-23% to 4.5-8.5% in January 2013 (for more, go here).
From the Chart 1, we can see that CPO is trading around RM2300-2400 for the past 2 weeks. Yesterday, it broke above that range & tested the RM2500 horizontal resistance. If CPO can successful breakout above the RM2500 mark, the current rebound can turn into a mini rally, sending CPO prices to first, close the gap at RM2700 (a resistance) and then, possibly test the strong horizontal resistance at RM2830 (also, look at Chart 2). I would consider the mini rally to be the optimistic scenario, while a successful breakout above RM2830 to be a low probability event. After all, CPO has broken the long-term uptrend line that stretched back to October 2008 (see Chart 3).
Chart 1: CPO's daily price as at Oct 22, 2012 (Source: iFSmarketcenter.com)
Chart 2: CPO's weekly price as at Oct 22, 2012 (Source: iFSmarketcenter.com)
Chart 3: CPO's weekly price as at Oct 22, 2012 (Source: iFSmarketcenter.com)
Based on the above, I would still maintain the negative outlook for CPO and the plantation sector.
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