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Monday, March 07, 2016

CPO: Short-term bearish

Last week, the Parabolic SAR (SAR stands for 'stop-and-reversal' indicator) has moved above the CPO price. This signals the correction in CPO, which would probably begin in earnest after it breaks below the medium-term uptrend line, YZ at RM2450. Below this support, CPO may recruit buying support at RM2300 & RM2150.


Chart 1: CPO's weeky chart as at Mar 5, 2016(source: ifs.marketcenter.com) 

Below we can see the movement of the Plantation index (with MACD indicator) as compared to CPO (in USD). From 2012 to early 2014, Plantation index had risen even though CPO (in USD) was in a downtrend. This downtrend has persisted until today (albeit a minor rebound) while Plantation index rebounded fairly well in the past 6 months.

Based on the bearish signal from CPO's weekly chart above, I believe that Plantation stocks should come under selling pressure in the coming days.


Chart 2: Plantation and CPO (USD)'s monthly chart as at Mar 5, 2016 (source: ShareInvestor.com & indexmundi.com) 

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