We are entering into a new era now. We will be seeing many dramatic events in this couple of months as we step into 2009. How dramatic could it be? Well, this week we heard of U.S. government’s move to bail out mortgage giants Fannie Mae and Freddie Mac. Thailand protest to call for Prime Minister Samak resignation. Malaysia Datuk Seri Anwar Ibrahim is declaring Sept 16th as the day to topple the Malaysia government. Even Malaysia Prime Minister Datuk Seri Abdullah Ahmad Badawi declared an emergency "study trip" to Taiwan starting from Sept 8th to Sept 17th to prevent defection to the opposition party. This trip involved almost half of the ruling party MP. What a dramatic event!! Let’s us look at Malaysia crude palm oil (CPO) and KLCI index futures market to see if we can profit from it.
Since the low made on the August 19th, FCPO were consolidating and formed a descending triangle chart pattern. Today morning we had a breakdown from this chart pattern and we can look to short FCPO Nov or Dec contracts. However, be careful of correction rally. FCPO Nov could retrace as high as RM 2445 which is the Fibonacci 61.8% retracement level. I am looking for a short term rebound at RM 2300 to 2330 level.
On the Sept 5th, Malaysia KLCI futures index (FKLI) made a new low of 1036 which was close to my forecasted KLCI critical rebound level. Right on the next trading day of 8th Sept, it rebounded to the highest level of 1073 before closing at 1070 which is right on the Fibonacci 61.8% retracement level. Please be reminded that 1038 might not be the final level for KLCI as it might potentially trend lower to 922 or worse. Right now, we are expecting a government change in Malaysia of which I am pretty confident that will happen. This will bring negative impact to the Malaysia financial market as investors will shun away from political instability.
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Dramatic story for Thailand. Prime Minister Samak Sundaravej got fired over cooking show.
FCPO Nov closed right at 2329 today.