At present crude oil is trading around $47 per barrel after heavy rallying from the bottom. Crude palm oil March 2009 contract closed at RM 1,740 last Friday on the first trading day in 2009. So, has the market bottomed for commodities like crude oil and palm oil? I would believe the price charts more than anything else. Generally I believe that the global stock market had bottomed for the moment. So, the short term market outlook will be looking bullish. What I mean by short term could be months to a year. What would be the trading strategy for us to adopt in 2009? Let’s check out the trader’s chart.
As we can see that the CPO for March 2009 contract closed above the RM 1,720 crucial resistance level on last Friday 2 Jan 2009. Could it hold above the 1720 level today? That would be crucial. My bullish outlook for crude palm oil commodity would be only valid if holds above that 1720 crucial level. It may or may not range around this level for a few days. Another major resistance level ahead for the FCPO would be at RM 1,900 level. Break and close above 1900 would signify a major bull run for months to come. Again, I would like to stress that I am not comfortable with the word bullish or bearish. These few words really blind us sometimes. This is due to the nature of time element in any investments or speculations. Oh, by the way, any investment vehicles or financial markets would be bullish if we look at 100 years timeframe. I would prefer the word uptrend for this round of wave.
Trading strategy is to be extra cautious as this is still around the market bottom range. We cannot force the commodities market to follow what we called them but we should react to their price patterns and watch for trend reversal. I would prefer to see the FCPO break the 1900 with confidence and then retrace back and hold above that "support" level. Then and only then we have confirmation for our trades.
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I watched news on TV on protests against Isreal attack on Gaza. I dunno why anybody would complain bout Israel attacking Gaza. If not because of Israel attacking Gaza, our KLSE CI would be <850, now our CI is 920! Ever since Israel start attacking Gaza, our market (and other global markets) has been up up and up. Remember when Israel started attacking Gaza, our CI +14points. Then when Israel killed a senior Hamas leader, our CI +18points! Now when Israel started ground attacks on Gaza, our CI +26points! Thanks to Israel our CI is now 920. Isreal attacking Gaza has been the best thing for our markets.
Hi Desmond,
This is a good example of how the stock market reacts to wars. In my opinion, it has “little” to do with the war although there are indirect connections between them. To me, war is not the main cause.
http://TradeOrInvest.com/10-things-you-dont-know-about-stock-markets/
You might be interested to read this.
It is somethings funny, isn’t it? Crude oil heading north and FCPO has been going up for 7 days (including 6th Jan 2009). Doesn’t it looks familiar with the rally in year 2007? Yet, watch out, the OP of FCPO is decreasing with increasing volume. So, our lovely KLCI is held up by plantation counter. Look at IOI, KLK, SIME..wonderful kick off 2009.
January abnormally happens!~ isn’t it? Yet, how many of us really believe in it ?
You are right… Major rally for those plantation counters. Just the start of a new year already the bull so strong. Haha, maybe it is the Ox year coming.
You may want to check out this post for your reference since I am writing it for you.
http://tradeorinvest.com/cpo-market-review-2007-bull-run-repeats-2009/