Plantation- time to take some profit

As at 4.00pm, CPO September future contract was trading at RM2476 (down RM49 or 1.9%). At the same time, Plantation index was up 140 points or 2.4% to 6083. Why the opposite moves? Chart 1 shows the intra-day movement for the Plantation index over the past 1 month.


Chart 1: Plantation's 60-min intra-day chart as at 14/8/2009_4.00pm (Source: Quickcharts)

The two intra-day CPO charts below will show that the upside for CPO prices may be capped for the next few days. Chart 2 shows that CPO prices are pressing against the upper boundary of the Bollinger Band, while Chart 3 shows that CPO prices are pressing against the upper boundary of the upward channel for CPO prices. If CPO prices were to drift sideway, one can expect Plantation index to follow suit. As such, you may want to lock in your profit for your Plantation stocks, if you have any. This can be a trading SELL whereby you can buyback the same stocks when the prices have eased back a bit.


Chart 2: CPO's intra-day chart as at August 13, 2009, with Bollinger Band overlaid (Source: ifs.marketcenter.com)


Chart 3: CPO's intra-day chart as at August 13, 2009, with upward channel drawn (Source: ifs.marketcenter.com)