• A weak start in 4Q17 after surging 9.9% in 3Q. After skyrocketing 18% from RM2455 on 30 June to a high of RM2896 on 14 Sep, FCPO tumbled 6.9% to end at RM2697 on 29 Sep, soaring 9.9% qoq. However, the index made a sluggish debut in 4Q, sliding RM32 or 1.2% to RM2665 on 2 Oct, recording its 11 th straight decline in the last 12 th sessions amid a confluence of negative news flows such as concern of rising inventory, softening rival edible oil prices, a rise in export tax for Oct and bearish price forecast by an influential industry analyst in the Globoil India conference.
• Extended ST consolidation with after breaking below 2755, the key 200-d SMA and support trendline (daily chart). Given the mid to long term bearish weekly/monthly readings, FCPO is envisaged to experience an extended consolidation with ST supports at 2623 (30-w SMA) and 2600. A decisive breakdown below 2600 will trigger further selloff towards lower supports at 2568 (120-w SMA) and the weekly LT uptrend line support near 2520.

• Nevertheless, as hourly/daily charts are showing grossly oversold levels, a technical rebound is likely in the near term with ST upside targets situated near 2700/2733 (10-d SMA)/2755.

Source: Hong Leong Investment Bank Research - 3 Oct 2017