ZLBT Chats

Thursday, May 30, 2013

Gold: Two elephants in a lifeboat

Who's rocking the boat? 
There are currently two players destabilizing global financial markets — like elephants in a lifeboat.

One is the Bank of Japan, with markets uncertain as to how massive expansion of the monetary base will play out.

The second is the Fed, where hints of a taper were enough to send the market into a panic, forcing the Fed to tone down its rhetoric. Emphasis now is on marginal rather than sizable decreases in QE.

Gold broke resistance at $1400, respecting primary support at $1320 and headed for another test of $1500. Uncertainty is high with the metal as likely to break resistance at $1500, signaling a primary up-trend, as to break primary support, which would offer a target of $1200*.


Monday, May 27, 2013

CPO rising up for Awal Ramadan

FCPO flashing positive signals ahead of Ramadan
FCPO Aug 2013 staged a breakout in the weekly chart today gaining RM9 to RM2380. Intraday volume however fell to 10157 compared to last Friday's 17858 contracts. In the Daily Chart, 3rd month Aug contract price is tagging the SMA 60 -days while daily prices are pushing the Bollinger Upper Band into expansion mode.

Both daily technicals mentioned are positives and could possibly be preludes for better sentiments in anticipation of higher demands ahead of the fasting month of Ramadan which falls on the 10th July.

Trading Strategy

Overbought Stocks RSI 70+ & above, Oversold Stocks RSI -30 & below


FCPO >>> Commentary and Technical Analysis 27 May 2013

FCPO Daily technical analysis:
The FCPO active month contract managed to end in the positive territory after it swung between gains and losses on Thursday. At the close, the FCPO price added 11 pts or 0.47% to 2,370.

A white candle with long lower shadow was formed as prices traded lower but were lifted by aggressive buyers in late trading hours to erase losses and finished at near intraday
high. Prices closed firm above 20 and 50 day moving averages, a sign of the domination of bulls in the market. MACD also supports the bullish trend signal by staying on its bullish journey and rising steadily. As such support and resistance can be pegged at 2342 and 2400 respectively.

Based on the daily chart, a positive candle with long lower wick has been formed on Thursday where it indicated the FCPO price was supported at the intraday low level.

During the trading session, the FCPO fell to as low as 2,342 due to uncertainty in the external markets which weighed on the market sentiment. As we can see in the chart, the price is unable to break above the level of 2,380 on Thursday. To rise further, it needs to break and closes above that mentioned level.

Referring to the MACD histogram, it is building up in the positive zone. As always, intraday support and resistance levels will be eyed.

Technical indicators:
MACD= Positive, ADX= Positive,

Intraday technical support & resistance for 27th May 2013:
1st support 2,342; 2nd support 2,330-00
1st resistance 2,380-90; 2nd resistance 2,400-15

Trade may long with a stop on or below 2342.

Thursday, May 23, 2013

FKLI >>> Technical Outlook 23 May 2013

Expect futures prices to succumb to further profit taking today ahead of the extended weekend. BSKL will be closed for Wesak Day on Friday.

Futures prices cascaded 0.64 percent, closing at 1776. Trading activities formed a black candle with long upper shadow, implying that
gains posted in the earlier trading session were not sustained. This formed a bearish harami which indicates further downward potential.

The downward price movements managed to bring RSI indicators down from a previously overbought situation.

Additionally, MACD indicators is currently neutral, a signal that bullish momentum is waning. As such, range for the day can be eyed at 1760 and 1785 respectively.

Intraday technical support & resistance for 23rd May 2013:
 1st support 1,770; 2nd support 1,765-60
 1st resistance 1,785, 2nd resistance 1,796-1800

Trade may short with a stop on or above 1785.


Friday, May 17, 2013

FBM KLCI closes higher on late buying, Genting Bhd, IOI Corp

Late buying of index-linked stocks enabled the FBM KLCI to close today in positive territory, underpinned by fund buying of Genting Bhd and IOI Corp.
At the close, the FBM KLCI was up 2.44 points or 0.14% to 1,769.16. Turnover was 2.11 billion shares valued at RM2.07bil. There were 588 gainers, 271 losers and 263 counters unchanged.
The KLCI fell into the red in the later part of the afternoon in the absence of strong corporate newsflow and leads from regional markets. However, the broader market was firmer, with buying of smaller capitalised and lower liners.
Genting Bhd rose 18 sen to RM10.76, pushing up the KLCI by 1.43 points. Petronas Dagangan rose 32 sen to RM25.12, Petronas Gas 14 sen to RM22.04 and UEM Land four sen to RM3.17.
Among the banks, Hong Leong Bank rose 26 sen to RM14.30, HLFG 16 sen to RM15.56, AMMB nine sen to RM7.24 and RHB Cap two sen to RM8.81. Public Bank fell 10 sen to RM16.60 and CIMB shed one sen to RM8.33.
The ringgit continued to lose ground against the US dollar, slipping to 3.0220 from the previous close of 3.0139.

FKLI down 0.79% to 1765 on profit taking

FKLI Daily technical analysis:
 The FKLI spot month contract ended sharply lower on Thursday due to Malaysia GDP released worse than expected which had dampened the market sentiment. At the close, the FKLI price dropped 14 pts or -0.79% to 1,765.

 Based on the daily chart, another long negative candle has been formed on Thursday where it indicated sellers remained aggressive throughout the day. During the trading session, the FKLI price went down to as low as 1,762.5 where it had tested the range support level. On the other hand, we should monitor closely whether the price is able to stay above the level of 1,760. If the price breaks and closes below this level, it may drop further.

 Referring to the MACD histogram, a rounding top is forming up. As always, intraday support and resistance levels will be eyed.
Technical indicators:

 MACD= Positive, ADX= Positive,

Intraday technical support & resistance for 17th May 2013:
 1st support 1,760-55; 2nd support 1,750-40
 1st resistance 1,775-80, 2nd resistance 1,786-96

Tuesday, May 14, 2013

KPS (5843) to retest support before advancing

KPS (5843)
KPS has tested the support of 1.17. It is important to monitor the price volume action near this 1.17 level to determine whether the rebound is sustainable.


One of the most important aspects of this indicator is to keep in mind, that the positioning of the "dots" (aka bubbles) is used by traders to generate transaction signals depending on where the dot is placed relative to the asset's price. A dot placed below the price is deemed to be a bullish signal, causing traders to expect the momentum to remain in the upward direction. Conversely, a dot placed above the prices is used to illustrate that the bears are in control and that the momentum is likely to remain downward.

FCPO, FKLI Previews and Commentaries 14 May 2013

Palm oil prices tumbled on profit taking after having reached one-month high in early trading hours. Pressure also came as lower domestic inventories outweighed by high stock level at China and India which triggered concerns about limited palm oil demand from these major importers. NYMEX crude posted losses on third consecutive trading day on China’s oil demand which fell to 8-month low in April as industrial output expanded at slower pace than expectation.

Prices received additional pressure after robust US retail sales sent dollar higher as it would bring negative impact to commodity prices. Investor now await cue from API oil data due later today and EIA data on Wednesday. Despite the poor weekly soybean exports, US soyoil ended higher on strong cash market and spillover effect from short covering rally in corn.

Expect CPO futures to trade higher as palm oil trading at discount to other edible oils amid speculation over a possible drawdown in inventories in Indonesia, the world’s largest palm oil producer, to a 6-month low as consumption increased.

Overnight Leads
Soybean futures on the Chicago Board of Trade rose on Monday on firm cash markets and
tightening U.S. supplies, lifting the spot contract to a six-month high, traders said.

Futures settled at 2310, down 9 points. A black candle was formed as prices opened higher but upward movement was not sustainable, as stronger sellers have taken control of the market for the day. However, prices remained position above 20 day moving averages and MACD on
its bullish journey, therefore bulls remain in firm on technical grounds. As such support and resistance can be pegged at 2300 and 2335 respectively.

Technical indicators:
 MACD= Positive, ADX= Neutral,

Intraday technical support & resistance for 14/05/2013:
 1st support 2,300; 2nd support 2,270
 1st resistance 2,335; 2nd resistance 2,380-2400

Trade may long with a stop on or below 2270.

FKLI Daily Preview and Technical Outlook

Expect futures to trade lower today upon staging another record high yesterday. US stocks ended little change after violating fresh peaks yesterday despite stronger than expected retail sales data reported in April which indicates rising consumer strength.

Nevertheless, resilience in the healthcare sector managed to provide strong support against profit taking activities, whereby
investors took a pause after the recent rallies. Back home, the FBM KLCI traded steadily higher throughout the day, climbing 0.88 percent to end at 1787.90. 

This marks the third all-time high closing price recorded since the General Election was concluded on May 5th. Gains in the local bourse correlated with strong performance in the US market which rallied to close at another record high last Friday. Amongst the outperforming stocks were Petronas Gas, Petronas Dagangan, and PPB Group. Futures now trade at a wider discount of approximately 6 points below its underlying cash market.

Futures prices rocketed 0.73 percent before closing at a fresh record at 1782. The formation of a white candle with a shaven bottom emphasizes the strong bullish force witnessed in the trading session. However, do expect slight consolidation on prices today as RSI indicator is showing sign of being overbought. Hence, do expect price direction to be uncertain whilst a break below its first support at 1775 will exacerbate selling pressure. As such, prices are expected to trade between a support and resistance of 1775 and 1795 respectively.

 Intraday technical support & resistance for 14/05/2013
 1st support 1,775; 2nd support 1,765-60
 1st resistance 1,786-95, 2nd resistance 1,800

Trade may short with a stop on or above 1795.

Saturday, May 4, 2013

GE13 >>> A changed Malaysia come May 6

No matter which coalition makes the government in the early morning of May 6, one thing is certain — Malaysia has changed and it is business unusual for the new administration.
With the respected Merdeka Center for Opinion Research’s latest survey showing a dead heat between both Barisan Nasional (BN) or Pakatan Rakyat (PR), the winner’s first job is to respond to a populace that questions and demands more from its government.
Forget the docile and subservient citizenry that thought government always knew best. That worked for some 55 years but this is a new Malaysia where the people are more advanced and ambitious in thought than their politicians.
 A population where pensioners and the bloated civil service are no longer a sure vote bank, where racial barriers have collapsed and people are one as Bangsa Malaysia — concerned more about the economy than the personal lives of politicians.
This single-mindedness and unity comes despite the overt racist tones in the campaign since Nomination Day on April 20 or the fear-mongering being played out by certain political parties.
The results of the latest Merdeka Center poll — 42 per cent of the voters agreeing that PR could govern the country against 41 per cent who felt only BN should rule Malaysia — reflect how far the country has come from elections where politicians just pleaded to be a strong opposition.
“Change happens all the time and in the same way that none of us can ever imagine Malaysia regressing to an age where women are not allowed access to education, we cannot ever imagine going back to a politics that is simplistic, patronising, top-down and unchallenged.
“Even the former opposition parties have learned, over the past five years, what it is really like to be in power and having to be accountable to NGOs and public opinion. It’s been a learning experience for all of us, and I believe we have grown a little wiser too,” well-known academic Dr Farish A. Noor wrote in an essay today.
That wisdom has meant that no government can now simply implement a top-down decision without being questioned by the people or told in no uncertain terms how unpopular some ideas are.
Ideas are being shared and shaped through the Internet, people, young and old, are coming together and ahead of politicians whose mindsets belong to the trunks of their forefathers who travelled in the previous century.
The old must make way for the new, just like party-owned newspapers that will be held accountable for their reportage. The days of being the only source of credible news is over for the likes of the New Straits Times, The Star, Berita Harian or Utusan Malaysia.
There is now a proliferation of news portals and growing rise of video clips that tell a story better and faster than any propagandist can. The new media has become the standard way of creating and consuming news and information, leaving in its wake shrinking audiences for newspapers and state broadcasters that refuse to step into the 21st century.
Why? Because there are more young people now than ever before. More of who want a say in their country Malaysia. More who will come to vote tomorrow as eagerly as those Malaysians abroad last Sunday.
We have changed as Malaysians. We are no longer bystanders and an audience of a national narrative written by politicians. We are the active participants shaping Malaysia’s direction and discourse, looking askance at politicians who think nothing of shifting thousands of voters across the country before the polls.
This is the new Malaysia that will vote tomorrow for a better Malaysia for all who proudly call themselves Malaysians. The Malaysia that keeps its government on its toes for fear of losing its job.
This May 6 the new government will be one that learns more from the people than it can teach the people unlike the past 55 years.

GE13 >>> PR will fall short in race to Putrajaya

Fifteen hours before the polling stations open tomorrow, May 5, it's no longer neck-and-neck between Pakatan Rakyat and Umno/BN for a photofinish.

The alarm bells are ringing.

It looks like PR will fall short in the race to Putrajaya.

What "effect" Hindraf Malaysia Association (Himas) will have on the election results in Malaya remains to be seen.

However, the return of the two-thirds to Umno/BN as urged by Himas, is not possible without massive electoral fraud. The Hindraf factor alone is not enough for Umno/BN to regain the two-thirds majority. In that sense, the Hindraf-MOU may be the proverbial fig leaf to cover the two-thirds majority scam idea.

It's 50:50 in Perak.

PR is on target in only half the seats it needs to capture in Johore. 

It's tough in Negri Sembilan.

In Sabah, Star/Usno will deny it some of the parliamentary seats it needs to get to Putrajaya.

Sabahans have definately decided not to split their anti-BN votes. Ironically, this is an idea promoted by Sapp which may end up with zero seats.

Sabahans will vote for the most winnable Opposition candidate.

For Parliament, the trend is to vote for PR except in Keningau where Jeffrey Kitingan is taking on his elder brother Joseph Pairin Kitingan and in Penampang where Bernard Dompok is defending his seat.

The Opposition can get 13 parliamentary seats including Labuan i.e. Star/Usno 5 (min 10 state) KDM/Suluk; Dap 3 (max 6 state) Chinese; and independents/PKR 4 (max 12 state) Suluk/other Muslim; and Pas 1 (max 3 state) Suluk/other Muslim.

The chances of PR getting 15 or 16 parliamentary seats in Sarawak remains to be seen.

At present, it can bank on only 9 Sarawak seats at the very maximum i.e. including the Bidayuh seat of Mas Gading where Star is also present and the Orang Ulu-dominated Baram where PKR has a clear shot at victory.

The fight is not over yet.

Opposition Leader Anwar Ibrahim is best in the streets.

After May 5, when it's clear that Umno/BN cannot be dethroned through the ballot box despite being in power 56 years, the Opposition will have to take to the streets, occupy Dataran Merdeka and demand the setting up of an Interim Government which will clean up the electoral rolls, purge the Govt sector of card-carrying hardcore Umno racists, and hold free and fair elections which will end Umno/BN rule.

If Umno/BN regains the two-thirds majority and attributes it to the Hindraf factor, no one will buy it.

Again, regaining the two-thirds would be evidence that the 13th GE was not free and fair, and that there was massive electoral fraud probably using, among others, the MyKads of Indians who, based on past records, do not turn out to vote.

Himas and Hindraf Makkal Sakthi chairman P. Waythamoorthy may have unknowingly fallen into an Umno/BN trap in their desperation to win, let alone get a two-thirds majority.

Friday, May 3, 2013

GE13 >>> Market likely to fall if PR wins

The stock market is expected to fall if the opposition coalition Pakatan Rakyat (PR), which has no track record in running the federal government, wins the coming general election and takes over control of Putrajaya.
But the market could recover quickly from this knee-jerk reaction if PR, seen as business-friendly, could decide fast who will be the prime minister and form its Cabinet soon.
It will be worse for the market if either PR or the incumbent Barisan Nasional (BN) wins with a very slim majority, or if there is a hung Parliament, as uncertainty will linger on until a new government is formed.
These views are prevalent among fund managers, analysts and dealers when theedgemalaysia.com did a cursory survey of market players this week.
Ang Kok Heng, who manages RM1.4 billion worth of funds for Philips Capital Management Sdn Bhd, said: “If PR wins, the market will definitely fall as markets do not like uncertainty. This will go on until the dust settles and PR starts managing the country.”
He added: “Most in the market are now betting that the BN will win. If it is otherwise, the market will fall. But we are prepared to buy up beaten-down stocks that we like. Our strategy is to buy low and sell high.”
While seeing value in banking, oil/gas sectors now, Ang said after the election results are announced, investors should go for short-term technical trading.
“When quality stocks plunge, we will buy. You can’t select sectors when the whole market plunges. You have to go by stocks,” he advised.
Credit Suisse’s analyst Tan Ting Ming, in her recent research note, opined: “If PR wins, the market could see a knee-jerk reaction as equity investors dislike change and uncertainties. Without a track record, there will be political and economic uncertainties if PR takes over.”
Under PR rule, the market could expect monopolies and concessions to come under review, and Tenaga Nasional may suffer a hit as PR has stated in its manifesto it wants to cut electricity tariffs, she said.
And REITs, consumer staples and telcos will likely outperform, according to Tan.
She said if PR implements its manifestos, Malaysia’s budget deficit could worsen as PR may increase subsidies and hand-outs.
A senior institutional sales manager, who declined to be named, shares the views of Ang and Tan.
She said: “If BN wins, the market will rally. If PR wins, the market will definitely fall. But under PR, if the question of who becomes the next prime minister is settled fast, the market will calm down. Forming a cabinet promptly will also instil confidence.”
Under PR rule, counters linked to caretaker Prime Minister Datuk Seri Najib Razak such as CIMB Holdings, PNB-controlled and Khazanah-linked shares are likely to lead the decline.
And companies which have been awarded the BN caretaker government’s contracts after the dissolution of Parliament may be hit, as they may not be recognised by the new government.
In fact Najib, who is leading BN in this most-fiercely contested general election in the country’s history, was one of the first political leaders to talk about post-election market reactions.
In a recent interview with Bloomberg, he said: “The market, the currency (ringgit) will take a very sharp decline if the opposition wins.”
Bloomberg reported that companies controlled by Tan Sri T. Ananda Krishnan and Tan Sri Syed Mokhtar Al-Bukhary may face government scrutiny should PR win.
Companies linked to these two billionaires include Astro, DRB-Hicom, Maxis, MMC, Padiberas and Tradewinds.
But the worst for the market is likely to come if the election outcome shows a very close win for either BN or PR, which could result in a hung Parliament as the balance of power is almost equal or equal.
As there are 222 parliamentary seats up for grabs, BN or PR will have to win 112 seats to claim simple victory, and many more to claim absolute win.
A win by either group with a very slim majority is likely to plunge Malaysia into prolonged political crisis, as the two rival groups are likely to scramble for power by enticing elected MPs to cross over to their camps.
In the unlikely event that there is no leader who can command majority support, the King may have to step in to appoint a caretaker leader.
“A hung parliament would be the worst possible outcome of the election. If this happens, large domestic investors may hold on to their equities. If they are negative, trim their portfolio by 10-20% and short index futures,” advised an investment banker.
Many political analysts believe that if BN wins narrowly, Najib’s leadership could be challenged at the next general assembly of his party UMNO. And this will add more political instability.
As most in the market are now betting that the BN could win by a majority of one to three percent, anything beyond this margin will be “a bonus for the market”, said market players.
As long as BN wins, construction stocks such as Gamuda and IJM, and gaming stocks could still see a relief rally. UEM Land should continue to thrive while business will be as usual for most banks, said Tan.
While many see the market fall if PR wins or if there is a draw, they do not rule out the possibility that the stock market could rebound quickly if uncertainty could be removed promptly.
While foreign funds are lurking ahead of the general election, pushing the benchmark FBM KLCI to new record highs, there are also pools of local funds and cash-rich investors who are waiting to make a kill.