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Wednesday, June 04, 2014

CPO: Heading to RM2300

CPO broke its medium-term uptrend line at RM2600 two weeks ago. Last week, it broke the horizontal line at RM2500. It is destined to test the next horizontal line at RM2300. If that line is also violated, CPO may revisit the July 2013 low of RM2150.

Based on bearish outlook for CPO, Plantation stocks would be negatively affected.


Chart: CPO's weekly chart as at June 2, 2014 (Source: ifs.marketcenter)
Note: The unattractive composite chart is much regretted. 

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, CPO and/or any Plantation stocks.

5 comments:

Ivan said...

Time for CPO to rebound later. ..

Steven Lee said...

double bottom made

Alex Lu said...

Hi Ivan & Steven Lee

I think CPO may have made a temporary bottom. A rebound is likely.

limcc said...

Hi Alex,

CPO price has now broken 2000 level. Could a rebound be on the horizon in the near future?

Thank you.

Alex Lu said...

Hi limcc

CPO has a strong horizontal support at RM2000. Let's wait & see whether CPO will rebound from here.

If this important psychological level is taken out, then CPO will slide to the next support at RM1700 & even RM1400.

Looking at the CPO long-term chart, it looks like CPO has been in a downtrend since Dec 2011. In this downtrend, there are 3 corrective waves: A, B and C. We may be in Wave C, which could touch 1900. I'm assuming Wave C to be 1.6x Wave A. Wave A is a drop from the Dec 2011 peak of RM3800 to the intermediate low of RM2800 and Wave B is the rally to RM3500. Thus, the target for Wave C could be RM1900 (RM3500 - 1.6x[RM3800-RM2800]).

This is based on the downtrend in 2008 to 2009. In that downtrend, CPO peaked at RM4400 in Feb 2008 and dropped in the intermediate low of RM3000 (Wave A) before rebounding to RM3700 in Jun 2008 (Wave B). This was followed by a drop to RM1400 (Wave C). Wave C was a 1.6x extension of Wave A.

For more on Elliot Waves, go to http://stocata.org/ta_en/elliott.html