Benny Lee on BFM 89.9

Shares on Bursa Malaysia rose today, with the FBM KLCI gaining 0.6% to 1,266 points on a technical rebound, according to Benny Lee, Chief Market Strategist of NextVIEW. He believes that in the short term, upside potential for the market is very limited and looking at the FBM KLCI there is a strong resistance at 1,290-1,300 points. He advises investors should stay away from the market until the market corrects further.

Benny Lee on BFM 89.9

Benny shares his views on Bursa Malaysia FBMKLCI and CPO Futures, US dollars and Airasia.

Crude Palm Oil Futures Commentary and Forecast

The price of FCPO continues to trade in a sideway range between RM2,070 and RM 2,240 per metric ton. Traders can continue to trade at these ranges by buying near the lower range and sell at the higher range. Last month created this opportunity as the price of FCPO went as low as RM2,013 and as high as RM2,250. The price of FCPO is currently at RM2,208. The market did not rally despite re-planting exercise by producers which affects the supply or palm oil into the market.

Click here to continue reading more on FCPO be Benny Lee.

Commodities Bull

Prices of major commodities have found its footing in the past few months and the recent price actions and the weakening US dollar set to push prices of commodities to new highs. There are tell-tale signs that global economy is improving (at least that's what the analysts say) and demand for commodities is expected to increase to fuel the economy. Most commodities prices have broken out of the correction zone and I am expecting the bulls to pull the commodities market to fresh highs.

Crude Oil:
The price of Crude oil on NYMEX has just jumped above US74 a barrel, breaking out of the US$65 - US$64 correction range. It has a very high chance to rally into the regions of US$82 - US$85 region in the short term. It may even go to US$91 a barrel in the intermediate term of 6 months.

Gold
COMEX gold performance was extremely bullish as the price continues to make new historical highs. The price of Gold has came out of the correction period in early September and now has a price target of US$1,120 an ounce in the short term based on the triangle chart pattern price objective and US$1,300 in the intermediate term of 6 months.

Rubber
Price of Rubber has rallied quite strongly in the past few weeks and this bullish momentum is set to continue with a short term price target of JPY$230 a kg and an intermediate price objective of JPY$260.

Crude Palm Oil
Price of Crude Palm Oil has also showed strong support in the past two months and the increasing demand for this commodity has cause the price to start climbing. The bulls have just started to pull this market. Price is expected to hit RM2,400 in the short term and even climb to RM2,800 in the intermediate term of 6 months. See more detail analysis here.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Crude Palm Oil: Correction may soon be over, time to rebound and rally

In my article last month, I mentioned that the price of Crude Palm Oil Futures (FCPO) in Bursa Malaysia which was at RM 2,145 per metric ton at that time may only find support between RM2,000 and RM2,050. The price of FCPO fell to a low of RM2,013 on October 6 and rebounded to close at RM2,085 on October 9. With this close, the price of FCPO fell RM94 or 4% from a month ago. I also mentioned that once price goes to this support level, it may start to rebound and rally at least to RM2,300 in the intermediate term. Now that price is near this technical support area, there is a good chance for buying because risk is low.

The price of FCPO is still in a correction zone of a major uptrend, clearly defined by a triangle chart pattern since May this year. Price is currently below the short to long term 30 to 90 day moving averages. The averages are currently converging and this indicates that the correction may be over soon. The averages are between RM2,150 and RM2,230. Average daily trading volume has slightly reduced to 9,200 contracts last month from 10,400 contracts in the previous corresponding month. Selling pressure in the previous month has eased off.

The support level of the triangle pattern may be broken in mid of September at RM2,130 but the stronger support level, like I mentioned in my previous article is between RM2,000 and RM 2,050. Therefore, it is not considered as a broken support level and the correction is still intact. Currently, the support level remains at RM2,000 and the triangle pattern resistance level is RM2,300. Price is expected to reverse its uptrend if it breaks below the support level or continue its uptrend if it breaks above the resistance level.

Momentum indicators are slightly bullish now with RSI and Momentum indicators inching away above the middle level. The strongest sign of a bullish momentum is the MACD indicator which has just started to cross above its trigger line or its 9-day moving average. The only indicator that still indicates down trend is the ADX indicator. However, the ADX is the most lagging indicator.

The weekly chart shows a bullish reversal Japanese Candlestick pattern called the “Piercing Line”. The last time the chart showed a similar bullish reversal pattern on the weekly chart was on the week of July 17 and price rallied from RM2,120 to RM2,440 in four weeks. With the current pattern, price is highly expected to rebound out of the correction zone and rally upwards.

Price is expected to at least rally the next resistance at RM2,300 and even go higher to test the next resistance level at RM2,400. If the price of FCPO is ablt to overcome these resistance levels, the price of FCPO may even rally to RM2,800, but probably not this year. The forecast is valid only if the price of FCPO stays above RM2,000 and if this support level is breached, price of FCPO may fall further to RM1,900.


Daily FCPO chart as at 10 September 2009 using NextVIEW Advisor

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Commodities: Crude Palm Oil Analysis

Price of FCPO was not able to stay above the uptrend line last month as price continues to decline. The FCPO price fell RM169 per metric ton or 7.1% to RM2,186 in a month. FCPO and soyoil was going against the other commodities trend as the dollar weakens. The price of FCPO found support at RM2,070. The price has been trading in a range between RM2,070 and RM2,240 in the month of September. Exports were slowing down as inventories were increasing in importing countries amid lower consumption.

For more, click here and look for Market Insight

Crude Palm Oil: In a longer term correction

The market turned bearish last month after a short term bullish rally from RM2,000 per metric ton in July to a high of RM2,515 in just one month. It turned bearish when the price of FCPO tested and broke below the RM2,300 support level early September. I have mentioned that if this support level is broken, the price may hover around the averages at about RM2,100, from the intermediate up trend line from October 2008. The price of FCPO closed at RM 2,145 on September 11, RM319 or 13% lower from a month ago. The thought having the price of FCPO going to test RM2,800 again this year fades away.

The decline in palm oil prices were mainly due to decline in exports. Malaysia palm oil inventories were up at the end of August. MPOB reported palm oil stocks increased 6.2% on-month to 1.42 million tons. Malaysian palm oil exports declined due cutbacks in palm oil imports from the European Union and China. MPOB said that exports were down 9.5% on-month to 1.32 million tons in August. Cargo surveyors SGS Services and Intertek Agri Services estimated palm oil exports for 1 to 10 September to decline 17% and 15% on-month respectively. Favourable weather in Malaysia and India's Meteorological Department announcing a revival in monsoon rains may ease drought in India, boosting crop development. These fundamental provide resistance for the price of crude palm oil to move higher.

The price of FCPO has gone below the moving averages and the 30, 60 and 90-day moving averages have just started to decline. The averages are between RM2,200 and RM2,300. The FCPO price is currently right above the intermediate up trend line. Trading volume has slightly improved with a daily average of 10,400 contracts as compared to 9,200 contracts in the previous month and this indicates a selling pressure because of the price decline in the past one month.

Because the price did not rally upwards, a long term correction chart pattern called the “triangle” has formed and this can be easily identified on the weekly chart. The support level of the triangle pattern is currently at RM2,050 while the resistance level of this pattern is at RM2,400. Therefore, price is currently near the support level. As long as the price stays within this support and resistance level, the price is still in a correction. A breakout above the resistance level would cause the price to rally but a breakout below the support level would cause price to decline further.

Momentum indicators are mixed with a slightly stronger bearish strength. Indicators on the daily chart are bearish. The Relative Strength Index (RSI), Momentum indicators are below the mid-level. The MACD indicator is declining and is now below zero which means that the trend is down. The rising ADX indicator also shows strong bearish trend. However, in the longer term, momentum indicators on the weekly chart are mixed where the indicators are almost neutral.

Price is currently near the support level and a rebound is expected at around RM2,000 to RM2,050 to at least the average price in the correction period and that is RM2,300. In the longer term, the price trend direction depends on whether the price breaks above the support or resistance level. In the short term, the FCPO price is expected to stay between this support and resistance levels. If FCPO price is unable to stay above RM2,000 and breaks below it, the price is expected to fall and test the next support level at RM1,700. If price breaks above RM2,400 resistance level, then we may expect price to rally to test the RM2,800 resistance level again.


Daily FCPO chart as at 10 September 2009 using NextVIEW Advisor

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Crude Palm Oil - Price at Support

The price of FCPO went into a bullish rally for one month in the mid-July to mid-August. The price climbed RM525 per metric ton or 26% from a low of RM1,990 to a high of RM2,515. The price then went into a correction, goes to a low of RM2,234 before settling at RM2,366 at the end of the month. The RM2,234 low was a 50% retracement from the one month bullish rally and the 30-day moving average line.

Technically, the price is still in a long term up trend but in a correction. The 90-day moving average is still increasing but the shorter averages are mixed. In the last one week of the month, market was uncertain as it traded in a tight trading range. The price of FCPO is currently slightly above the long term 15- and 30- week moving averages. A new up trend line is developed and is currently at RM2,300 and increasing.

Read more here

FCPO analysis - RM 2,800 again?

A month ago, I have expected the price of FCPO in Bursa Malaysia to have a bullish bias and test the resistance level of RM2,300 per metric ton because that was the long term 90-day average. The price then was RM 2,020. After facing some resistance at RM 2,340, the price of FCPO continue to climb and went as high as RM2,515 one day before this article is written. The price of FCPO pulled back to close at RM2,441 on 14th August because of sharp overnight fall in the price of soyoil and FCPO in the Dalian Commodity Exchange. The correction has formed a bearish reversal chart pattern based on Japanese Candlesticks analysis. So, question is, is the price of FCPO going to correct further downwards?

Minister for Plantation Industries and Commodities Bernard Dompok said on Friday that August inventories for palm oil may remain unchanged from a month earlier at 1.3 million tons. Cargo surveyors Intertek Agri Services and SGS (M) Bhd are due to announce Malaysia palm oil export for 1-15 August in the next few days but traders are expecting shipments to increase 1% from the same period last month. Demand from China, which is Malaysian main palm oil importer remains unchanged despite worrying economy. Weather forecasters are seeing developing El-Nino weather patterns towards the end of this year.

The FCPO price uptrend may be able to be sustained because of the strong fundamentals. Technically, the price of FCPO is still in an uptrend. The price is above the short to long term 30, 60 and 90-day moving averages. Price is just slightly higher above the averages and volume has been slightly increasing in the past one month. The 90-day average is currently at RM2,380. While the 60-day average is at RM2,293. The rebound from the recent low of RM2,000 confirms the intermediate up trend line (S1 on the chart).

Momentum indicators are showing strength in the current rally. The Relative Strength index (RSI) Moving Average Convergence/Divergence (MACD), Momentum and Average Directional Index (ADX) indicators are all making new highs. The strong momentum shows strong support and less resistance and therefore there is a high chance that price can climb higher. Therefore the pullback on Friday may be short-lived with a mild correction and the uptrend is expected to resume. So, this answers the question in the first paragraph.

The short term support level is at RM2,300 (the 60-day average) and this is where the price is likely going to be supported in the current pullback. If the price of FCPO can stay above this level, then expect price to continue to go higher and test the RM2,800 resistance level within this year. So there you go, based on technical analysis, I am currently bullish in the price of FCPO and RM2,800 can be tested again and this answers the title for this analysis.

There will be resistances along the way especially at RM2,600. However, if price falls below RM2,300, further sideways correction is expected as price should hover around the averages if there not much developments in the industry or when the market is uncertain.


Daily FCPO chart with RSI and volume indicators as at 14 August 2009 using NextVIEW Advisor

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Crude Palm Oil Analysis - bullish

The price of FCPO went under the long term 90-day average last month and continues to move downwards within the down trend channel defined by the S1 and R1 lines in the chart below. The price went to the support level at S1 in mid-July at around RM 1,990 per metric ton and created an opportunity to go long. At this point, the RSI was in a divergence in with FCPO down trend. The price then rallied to the current level at RM 2,189. For those who are able to long at the support level there is a RM100 opportunity in half a month.

Now, the price of FCPO is at the resistance level of the down trend channel and slightly below the 90-day moving average which is currently at RM2,350. The momentum indicators are diverging against the current down trend. The RSI, MACD and Momentum indicators are rising when price is falling. This means that the down trend is weak and a trend reversal is expected.
The price of FCPO is currently at the long term average, defined from the 15 and 30-week average. With a bullish momentum forming, the current level may be attractive in the long term. The short term down trend may change its course.


Daily KLCI chart with volume as at 31 July 2009 using NextVIEW Advisor Professional

Although price is currently at the downtrend resistance level, there is a high chance of price moving higher because of the developing bullish momentum and especially if it breaks above the immediate resistance level which is currently at the RM2,250 and rally to the next resistance level at RM2,350. A more optimistic level is at RM2,800.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Price of FCPO expected to trade sideways with a bullish bias

The price of FCPO (Crude Palm Oil Futures on Bursa Malaysia) continues to fall as I have expected in the past one month but fell lower than expected. There is a technical support level between the price range of between RM2,100 and RM2,200 per metric ton but the FCPO went as low as RM1,990 from RM 2,400. The price rebounded and is now at RM2,020. However, the market did rebound temporarily from RM2,150 to RM2,340 from 22nd to 26th June before making its way down again.

Tree replanting efforts is being continued by the government may caused production to fall further in the coming months and cut more supply to the already shortage in current palm oil supply to the market. Plantation Industries and Commodities Minister Bernard Dompok is confident optimistic about higher oil price in the months ahead. Cargo surveyors SGS Malaysia and Intertek Agri Services estimated a 15% and 18% on-month increase in the July 1 to 15 period. Fundamentally, price of FCPO should increase as the cut in supply and increasing demand may push prices higher.

The market has provided a good trading range for traders. The 14-day average true range (ATR) which measures volatility is 75 points or 3.6%. However, average trading volume has been declining but the average open interest is increasing. This simply means more traders are sitting on open positions for a longer term rather than trading them short term in the market. The 30-day average volume was 9,200 contracts, 15.6% lower than the previous month’s average. The average volume has been declining for two consecutive months.

The price of FCPO was still in an up trend last month when it is above RM2,300 (which is the 90-day moving average). At current price, the trend is now down. The 30- and 60- day moving averages have just started to decline. However, the current down trend seems week because momentum indicators are in divergence with the trend. The Relative Strength Index (RSI) indicator pivot lows are higher despite lower FCPO pivot lows. The Average Directional Index (ADX) which was increasing since mid-June has started to decline as well, indicating a weak down trend momentum.

The long-term average is currently between RM2,100 to RM2,300 and therefore price is currently slightly below this long term average range. With the current bullish momentum and positive fundamentals, the price of FCPO has a high chance to move higher and probably test the upper level of the trading range which is RM2,300 if the price is able to break above the immediate resistance of RM2,150. So, expect price to be trading sideways with a bullish bias. Current support level is RM1,950 and if this level is broken, the next support level is at RM1,800.


Daily FCPO chart with volume as at 16 July 2009 using NextVIEW Advisor Professional

Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Trading the Crude Palm Oil Futures

The price of FCPO made a new pivot low after rebounding to a high of RM2,650 per metric ton early June. Since then the price of FCPO fell 19% in one month. FCPO price tested and broken the support level at RM2,350 before closing at RM2,150 on the 22nd of June. However, it rebounded and closed at RM2,317 on the 26th of June. The FCPO is back in a down trend after enjoying an uptrend since the beginning of this year when it broke the bottom line of the uptrend channel.

The price is now at the long term average price, defined by a 30-week average. The price is also at the 90-day average. The down trend has formed a linear down trend channel (please refer to chart below). The price is currently in the middle of the channel. The down trend is considered strong technically because the momentum indicators like the RSI and MACD are in convergence with the lower pivot lows and pivot highs.

Traders can trade within the down trend channel (See chart below). The top line of the channel which acts as resistance is currently at RM2,450 and declining and the bottom support line is at RM2,100 and declining. Going short at resistance level is preferable because the down trend momentum is stronger. There is no opportunity to trade at current level because the price is in the middle of this down trend channel.

It may be quite difficult to trade at current price when it is at the long term average because price may go sideways. So, it may be able to move into the support and resistance levels of the down trend channel. If the trader trades in this market, a stop loss should not be less than RM80 as the 3-period Average True Range (ATR) is averaging at RM80. For a safer stop, the stop loss should not be less than RM120, which is 1.5 times the ATR.


Daily FCPO chart with volume as at 26 June 2009 using NextVIEW Advisor Professional


Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Crude Palm Oil Futures: May test support levels around RM2,100 to RM2,200

In my article last month, I mentioned that there is a strong resistance for the price of FCPO (Crude Palm Oil Futures) at RM2,800 per metric ton and if it is not broken, the price may pull back to its long term average at around RM2,000. That was when the price of FCPO was at RM2,700 and today it is at RM2,400. The news about rising imports and Indonesia tax on CPO did not have impact on the price of FCPO and I was still convinced that the price of FCPO need to be corrected downwards because the price is overbought. The price was quite volatile last month. From RM2,700 it went to a low of RM2,350 before rebounding back to RM2,650. However, the rally was not sustainable and price fell to the current level of RM2,400.

FCPO traders are concerned about the demand sustainability and rising US dollars which may weaken the price of FCPO. The Malaysian Palm Oil Board says in official report that Malaysian crude palm oil exports rose 2.3% on-month to 1.22 million metric tons in May. However, estimates from cargo surveyors expect a drop in export estimates for the first half of June. Intertek Agri Services estimated a fall of 10 percent in exports while SGS expected a fall of 9.4 percent.

Trades have already started to look for positive catalysts to boost CPO price but the lack of strong fundamental data caused traders to continue staying out. Trading volume was relatively weaker as traders are still looking for cues from the market. The cue was pretty obvious last week when price was high and if only they knew how to read charts or this article last month, they would at least know the market vibration and know where it is heading.

The price of FCPO is currently in a correction period but is still in a long term up trend as long as it maintains above the 90-day moving average (90-SMA) which is currently at RM2,260. There is a temporary support level created last month at RM2,350. The momentum in price and volume is getting weaker. The Relative Strength Index (RSI) continues to make new lows while the Average Directional Index continues to decline. These indicators indicate weaknesses in price momentum. Daily average volume in the past one month was 10,900 contracts, 14 percent lower than the previous corresponding month.


Daily FCPO chart with volume as at 15 June 2009 using NextVIEW Advisor Professional

The longer term average for the price of FCPO has increased from RM2,000 to RM2,100 per metric ton. The weak momentum suggests that price may continue to fall and test the support levels. There is another support level that can be defined from the October 2008 to date rally which currently around RM2,100. The price of FCPO may soon test the immediate support level at RM2,350 and if this support level is breached, then the price of FCPO may test support levels around RM2,100 to RM2,200.

Strong resistance maintains at RM2,800 while immediate resistance level is at RM2,650. These two resistance levels can be connected by drawing a linear trend line which defines the current short term down trend and if this line is broken, we may see the price of FCPO going sideways.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Crude Palm Oil: Strong Resistance at RM 2,800

The price of crude palm oil in the futures market (FCPO) has been very bullish in the past one month, despite being overbought and having a technical resistance at RM2,540 per metric ton. The price of FCPO surged RM204 or 8.3 percent on-month. It went as high as RM2,799 twice this month but failed to break above this level before settling at RM2,663 on Friday. The surge in price was a result of speculation because of improving export figures. The price has retraced to almost 50 percent from the high of RM4,486 in March 2008 to a low of RM1,331 in October 2008.

The weakening price movement in the past few days despite strong fundamental factors shows that the market has already anticipated these factors and is already discounted in the current price. There is a strong resistance at RM2,800 and to go beyond this level, the market needs a much stronger catalyst to boost the price of CPO.

The price of FPCPO is still in a very strong up trend, but a little weaker from last month. The short and long term 30- and 90-day moving average is still up but the price is getting nearer to the short term average. The weaker momentum is also detected in momentum indicators like the Relative Strength Index (RSI) and the Average Directional Index (ADX). Both these indicators’ values are declining. The daily average volume for mid-April to mid-May is 12,700 contracts, a 44 percent increase from the previous corresponding month. The high increase in volume with price not getting higher also indicates that the price of FCPO is toppish.

The price of FCPO is currently 21.3 percent above the 15-week moving average. It was 23 percent above this average last month. The decline in the price momentum this week was the first in eight weeks. The 15-week average is currently at RM2,194 while the longer term average (30-week average) is at RM1,910. The presence of “doji” Japanese Candlesticks chart patterns in the past two weeks on the weekly chart shows that the market is toppish and a correction is likely going to happen.

The resistance at RM2,800 is strong because it was tested twice this month without being able to break above it. With weaker bullish momentum and toppish price patterns, the price of FCPO is expected to go into a downward correction this month, with a higher confidence. The price is expected to pull back to the averages between RM1,900 and RM2,200. Therefore a sharp pull back is expected. There is a saying in the market that if price goes up sharply, it falls sharply also.


Daily FCPO chart with volume as at 15 May 2009 using NextVIEW Advisor Professional

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.