Dear Friends & Associates,

It was a pleasant opportunity to have met you at Bali IPOC. Thank-you for registering for this free bi-weekly Palm Oil Analysis & Price Outlook Report.

I would like to believe many of us left the GAPKI’s IPOC in Bali assured that CPO prices would be on a bullish path for the first-half of 2012.

Many of us would be in for some rude surprises. If ever the analyst’s predictions based on the current supply/demand scenario are correct, CPO prices would not be expected to move upwards on a straight line. We are expecting to see price turbulence accompanied with some wild choppy trading range for the next six months.

CPO price trend for the short to medium term?

Based on my very effective trend-tracker exponentially-smoothed average (ESA), the immediate-term direction of the market is positive following the nine days downward adjustment. (please see BMD CPO chart).

Analysis of Elliot-Wave count suggests that we are now in the 2nd wave or (b-wave) of the Elliot-Wave 3-waves (a-b-c) correctional-move count.

Assuming that the “b-wave” were to expand, the upside for the very immediate term would be around the immediate resistance levels of RM3,140-RM3,160.(see chart).

If the underlying strength of the market is solid, we would see a resumption of the correctional rally from this point. Minor chart resistance at the RM3,200-RM3,250 levels may be re-visited under such circumstances.

In normal circumstances, the Elliot-Wave “c-wave” is a downward wave and the strength of this move would determine the overall direction of the market. In any case, the minor technical support of the market is now pegged at RM3,000 and if violated would signal that the CPO market is back to its bearish cycle.

Presently, CPO futures prices are in a mild RM15 to RM10 contango, meaning the future months CPO prices are at a slight price premium to the nearby months, reflecting storage charges, interest rates and insurance. The contango nature of the market shows that the immediate term supply situation of the market is normal and there no tight supplies.

Open-interest, defined as the size of the futures market, has remained steady above the 30,000 contracts (basis Feb futures) for the last two weeks despite price weakness. Meanwhile, the volume showed a steady decline. Analysis of the price, volume & open-interest shows that weakness over the last two weeks was on account of long-liquidation pressure and whatever selling that occurred was well absorbed by fresh buying.

The ICDX CPO February futures prices rebounded strongly after seven days of declines and looks set for further advances.  Daily trading volume has been on the advance with total  open-interest hovering slightly below the 1,000 contracts.

Elliot-wave count shows that the market has ended its first phase of its downward correction at “a” and has now enter into its second wave or “b-wave” of the three-wave correction.(see ICDX chart). This upward momentum backed by fresh buying and technical short-covering is likely to take prices to test the immediate chart-hurdle at the IR9,100-IR9,150 levels. A successful break above these levels would signal the resumption of the upward momentum and likely send prices higher to the IR9,250-IR9,300 per kilo levels.

The trend-tracker 2/5 ESA lines triggered the buy-signal and entered into a bullish divergence phase. This bullish development indicates that  the shortterm trend would remain constructive. (see chart).

Immediate support for the ICDX February futures is seen at the IR8,700-IR8,800 levels. Breaching of these supports would signal that the main trend has turned negative.

ICDX would be launching the RBD Olein futures contract on December 9th,2011 and we wish them the very best of success.

Please feel free to share this Palm Oil Trend Analysis and Price Outlook Report with your friends in the Palm Oil industry.

Thanking you in anticipation,

Sincerely Yours,
(Chief Coach – Master Trader Tutorials)


15th December, 2011

Dear Friends & Associates,

The Short-Term Trend to Remain Mildly Negative. Market Has Entered Into The Third-Leg Of The Elliot-Wave Correctional-Move.

The trend-tracker (exponentially-smoothed averages) now officially known as GMT2&5, triggered the sell-signal on the 9th, December and confirmed the end of the upward-leg (wave-b). This was followed by some aggressive fresh selling pressure coupled by long-liquidation, driving price below the RM3,000 level on numerous occasions last week.

Light buying supported was seen throughout last week around the RM2,980-RM3,000 levels, partly boosted by short-covering linked to profit-taking and partly by speculative and commercial buying.

As at the close of last week’s trading, (16th Dec), the GMT2&5 lines remained in mild negative divergence and signalled that the newly developed downward momentum could persist for a little while despite the slight rebound from its most recent decline-lows.

As a trend trader, I would like to assume that the latest downward wave(c-wave) is not completed until the GMT2&5 revert back to its positive mode by giving the buy-signal. (please see BMD CPO chart).

Meanwhile, the Elliot-Wave correctional wave-count clearly indicates that the market is in the 3rd and final correctional wave (c-wave) of the Elliot-Wave 3-waves (a-b-c) correctional-move count. The “b-wave” or upward-leg peaked at RM3,133 on 5th, December and the price weakness that followed took prices below the “a-wave” lows of RM3,011 established on 30th, November.

What does all these things means to us as a trader? Yes, it simply means that the technical correction or adjustment to the bull-run is nearing completion and the market is expected to enter into a new trading phase soon.

From a technical perspective, we may see some range-trading or price congestion around the RM2,970 to RM3,050 levels for sometime before the market takes on a fresh trend.

The ICDX CPO February futures prices turned negative some seven trading days ago with the triggering of the GMT2&5 trading signal. This bearish signal brought on renewed commercial selling from producers and pressured prices below it most recent-low levels last seen on the 29th of November.

As at Friday’s close, the ICDX’s CPO futures market trend remained in negative mode and signaled that the downward move is not completed.

The Elliot-wave count signaled that the market has completed its second wave or “b-wave” of the three-wave correction and is now in the third and final phase or “c-wave” of the three-wave correctional move.(see ICDX chart).

As at Friday’s close, the technical indicators failed to provide any solid evidence to confirm the conclusion of the c-wave. In any case, trading over the next few session could see prices of the February futures hovering around the IR8,600-IR8,800 levels before the market can fully settle in and see fresh direction.

The trend-tracker GMT2&5 stayed bearish on Friday’s close, remaining in bearish divergence and failed to confirm that the downward trend has ended. Please see ICDX chart.

And finally, please feel free to share this Palm Oil Trend Analysis and Price Outlook Report with your friends in the Palm Oil industry.

Thanking you in anticipation.

Sincerely Yours,
(Chief Coach-Palm Oil Master Trader Tutorials)