BT Morning Reports >>> Crude Oil + EURO + Gold

Daily Oil Report Wednesday 24th February 2010
Oil’s two week rally consolidated in and around the $80 level as we now await to see if the run will continue, or will profits be taken off the table? The Dollar has retreated, thus helping keep the oil price up, so the next big hurdle is tomorrows weekly oil inventory release and Bernanke’s two day testimony which starts tomorrow.

Market News
Ben Bernanke is scheduled to start his two day testimony tomorrow, with attention likely to focus on future interest rate policy
Goldman Sachs expect the price of crude to trade between $85 and $95 this year

Daily FX Report Wednesday 24th February 2010
The Euro once again finds itself at the centre of attention on another busy day in the currency markets. Unconfirmed talk that the Dubai government is going to help Dubai World with a $5bn bailout helped buoy currency markets, and dovish comments from the San Francisco Federal Reserve President helped push the Dollar lower.

Market News
San Francisco Federal Reserve President Janet Yellen suggested that any chance of a US rate hike was remote
Ben Bernanke is scheduled to start his two day testimony tomorrow, with attention likely to focus on future interest rate policy
The latest Ifo sentiment index fell to 95.2. Most analysts expected the index to record a rise to 96.4
Mervyn King, Governor of the Bank of England, reiterated that the recovery in the UK remains fragile, and the UK may have to return to quantative easing.

Gold futures retreated for a second consecutive session today, thanks to the greenback's accelerated gains against the euro. In addition, commodities traders remained cautious ahead of Fed Chairman Bernanke's congressional testimony tomorrow, which is likely to shed light on the central bank's monetary policy. By the close, April-dated gold gave up $9.90, or 0.9%, to settle at $1,103.20 an ounce.

FBM KLCI Futures >>> Market Overview

FKLI contracts ended generally higher
The KLCI Futures contracts ended generally higher Tuesday after surging more than ten points a day earlier. All contracts closed at discounts except the February contract.

The February contract closed at the day’s highest level of 1,270.0 points after rising 4.0 points, reversing its discount of 0.44 of a point to the underlying Monday to a premium of 3.57 points. The contract opened 2.5 points lower at 1,263.5 points and moved to a low of 1,262.0 points during the day.

The March contract closed 3.0 points firmer at 1,265.5 points, representing a discount of 0.93 of a point to the cash market against a discount of 3.44 points a day earlier. It opened 2.5 points weaker at 1,260.5 points and traded between 1,257.5 and 1,266.0 points during the day.

The June contract settled flat at 1,260.5 points, which is a discount of 5.93 points to the underlying, while the September contract closed 2.5 points higher at 1,254.0 points, representing a discount of 12.43 points to the underlying.

TECHNICAL ANALYSIS >> Composite Index 23/02/2010 / 综合指数 2010年 02月 23日

Composite Index 23/02/2010
As indicated by A, the KLCI tested the 1266.45 Fibonacci Retracement, but remained resisted. Therefore, the 1266.45 Fibonacci Retracement is still the resistance for the KLCI while the support is at 1256.52 Fibonacci Retracement.

As shown on the chart, the Bollinger Bands has not expanded, but the KLCI remains above the Bollinger Middle Band, while the Bollinger Middle Band is slightly tilting up, suggesting some improvement of the current movement.

As indicated by B, total market volume increased 10.7%, but still below the 40-day VMA level. This shows that the overall market participation is still relatively low, and this could be the reason why the KLCI failed to break above its resistance.

As indicated by C, the Stochastic retreated slightly, but still above the 70% level, thus the short term bullish signal remains intact. Provided that the Stochastic is still above 70% level, the short term technical outlook for the KLCI is still positive.

In short, the KLCI is gradually regaining some losing ground, but it is still too early to determine a reversal, for more conditions is needed. For the immediate term, if the Bollinger Bands should re-expands with the KLCI above the Bollinger Middle Band, it could be a positive start.

综合指数 2010年 02月 23日
如图中箭头A所示，富时综合指数一度上探1266.45点的费氏阻力线，惟综指精确的在1266.45点遇阻，所以此费氏线继续的成为综指的阻力水平，综指当前的支持水平则是1256.52点的费氏线。

如图所示，布林频带（Bollinger Bands）虽然并未明显的打开，不过布林频带已经开始缓缓的向上翘起来，这表示综指后市有进一步改善的迹象。由于综指已经处于布林中频带以上了，所以接下来若布林频带开始打开的话，那综指将有望更上一层楼。

如图中箭头B所示，马股总成交量稍微增加10.7%，所以成交量仍然低于40天成交量移动平均线（VMA）的水平，这表示马股整体市场仍然淡静，这使到综指回弹的趋势遇阻，通常成交量必须达40天的平均值，那综指上扬的趋势才能更有力。

如图中箭头C所示，随机指标（Stochastic）稍微下滑，不过随机指标依然保持在70%以上，这表示综指的短期走势目前依然保持在一个偏强的格局；以技术而言，接下来只要随机指标继续的处于70%以上，那综指的后市将看高一线。

总的来说，综指继续的从跌势中恢复过来，虽然综指能否完全摆脱跌势还是言之过早，但只要综指继续目前的步伐，综指是有望再度恢复涨势。短期内，只要布林频带开始明显的打开，而综指又能维持在布林中频带以上，那综指将有望更上一层楼。

Oh! Crystal Ball, Show Me the Future

Question:
What is the intermarket relationship between other market indices and/or such as the Dow, Soil Oil, Crude Oil, Palm Oil, the U.S. Dollar, and the futures market?

For example if I look at the futures market the night before, can this be used to gauge the next day’s market open or close? Thanks for all your very informative articles. They are always very helpful and interesting ........

From Thomas Lee Melaka

Answer:

To understand the answer I will soon give, you need to understand the basic definition of futures trading, so here it is …

“A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future and at a market-determined price (the futures price). The price is determined by the instantaneous equilibrium between the forces of supply and demand among competing buy and sell orders on the exchange at the time of the purchase or sale of the contract.”

The relationship between the future price and current price is real but extremely fluid. For example, Trader “A” might look at the futures market price of XYZ and see that the price is higher. That trader might determine that the trend of XYZ will be toward that higher future price and so he or she might take a long position based on belief that the futures price is correct. Trader “B” might see the same futures price of XYZ and then take the opposite position. Which way the majority of traders go is dependent on a wide variety of factors, too numerous and specific to mention here.

To use the futures price of XYZ as an indicator of the open or close price of a specific market on a specific day is only helpful if you understand the other variables affecting the price of the specific market you wish to trade. The futures market is one factor to consider.

For example, if you see the futures price of Soybean Oil going higher 90 days out, you might think the price of Soybean Oil will trend higher, so you buy long the next day. Mid-afternoon, a report comes out announcing an oversupply of Soybean Oil on the market. The current price drops. What do you do? It is the same for the indices as it is for any market—things can change, and change quickly depending on what the market knows now, in the moment.

In general, though, one could look at the futures market the night before and get a “feel” for the next day’s action, but it is only a feel. You must have all of your other “ducks in a row” in order to use the “indicator” reliably.

Inventories, productions or geopolitical discrepancies can alter some sentiments or even a whole trend with natural phenomenons such as El Nino, hurricans or industrial strikes which is all possibilities, and usually does, make a dramatic turnaround of the futures' prices you were looking at the previous night.

Be prepared for such eventualities at any given time usually withour prior warnings. The only certainty closes to a sure thing is the sun will always rises in the east and sets in the west.

Regards

ZL

HAPPY TRADING & GOODLUCK2U

Wall Street and Oil Report >>> What's Rumbling What's Tumbling

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Dow Last Minute Selloff Snap Winning Streak

The Dow Jones Industrial Average (DJIA – 10,383.38) couldn't stave off the eleventh-hour sell-off, settling on a loss of 19 points, or 0.2%. Energy concern Chevron Corp. (CVX) led the 19 losing blue chips into the red, while financial issues BAC and JPMorgan Chase (JPM) blazed the trail higher.

The blue chip average traded in a low-to-high range of only 65 points. The S&P 500 (SPX) and Nasdaq Composite (COMP)were more or less flat as well.

Coming off a strong week, it isn't unreasonable to see the bulls take a breather. Of course, there is a fine line between ignoring lackluster action and complacency.

The indexes are stuck in the middle of nowhere as far as near-term support and resistance. We could see the Dow retrace a couple of hundred points and still be above the recent lows. Likewise, a rally of a couple hundred points would still leave the blue chips below the recent highs. In other words, we could see a bit of back forth before any significant levels are hit.

The S&P 500 Index (SPX – 1,108.01) also ended on the south side of breakeven, giving up 1.2 points, or 0.1%. In similar fashion, the Nasdaq Composite (COMP – 2,242.03) swallowed a loss of 1.8 points, or 0.1%, thanks to a last-minute surge of selling pressure.

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Crude futures edged higher again today, thanks to a refinery strike in France and escalating geopolitical tensions. More specifically, after a sixth day of strikes by Total (TOT) refinery workers, a French petroleum industry body said the country has about one week of fuel supply left before facing a shortage. Meanwhile, also bolstering black gold was news that Iran has earmarked potential sites for 10 new nuclear enrichment plants, with construction beginning as early as this year. By the close, crude oil for March delivery – which expires after the closing bell – added 35 cents to settle at $80.20 per barrel.

March crude oil closed higher on Monday as it extends the rally off this month's low. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near-term.

If March extends this month's rally, the 75% retracement level of the January-February decline crossing at 80.72 is the next upside target. Closes below the 20-day moving average crossing at 75.30 would confirm that a short-term top has been posted.

First resistance is today's high crossing at 80.51. Second resistance is the 75% retracement level of the January-February decline crossing at 80.72.

First support is the 10-day moving average crossing at 76.30. Second support is the 20-day moving average crossing at 75.30.