Daily Report 281114 2014-11-28

Domestic gold slumped slightly in the night session, dropping below the bolster of 5-day moving average at RMB 238. It seems previous short-term rallying trend will come to an end. As for operations, previous long positions opened against 5-day moving average at RMB 230 should be closed. Short-term short positions could be taken at 10-day moving average around RMB 237. The bolster below is at RMB 233. Stop-loss should be set at RMB 238. The U.S. market is closed on Thursday and Friday due to the Thanksgiving Day. However, the gold market still fluctuates violently. Major investment banks expect the referendum in Switzerland aimed at increasing gold reserve will fail. The gold is then forced to drop at $ 1200 and it is likely to plump further if the referendum fails. The overnight crude oil plunges resulting from supply of OPEC did not shrink as expected. The USD index rose, bring pressure to the USD-denominated gold. On the whole, investors are not recommend to take any moves before the result of Swiss referendum is released.


Domestic silver dropped slightly in the night session, breaking down 10-day moving average at RMB 3435 in short run. The rallying risk of silver still exists. In terms of operations, previous long positions opened when the silver broke through 5-day moving average at RMB 3350 is recommended to close. If the trend is weak during intraday trading, short-term short positions could be taken. The downside bolster of silver is the 20-day moving average at RMB 3375. Stop-loss should be set at RMB 3420. Considering silver’s special characteristics, it is still following the trend of gold and it wound be hardly likely for the silver to get out the trend independently.

Stock Index

Stock index remained the upward trend yesterday, with the volume hitting new record high. The stock index is mainly dragged up by sectors like securities, insurance, real estate and etc. Although stock index fell for several times during the intraday trading, it rose quickly and offset previous losses. It is expected that the rate cut period will begin soon. Bullish sentiment is increasingly strengthened in the market. The trend afterwards is temporarily unable to be predicted. Investors are recommended to follow the trend of market in short term.


On Thursday, the U.S. market was closed due to the Thanks giving break. For now the U.S. soybean price is waving around $10-11; current focus should be on the huge amount of supply and the demand of the market; judging from historical data, by the end of Q4 to 2015 Jan., the market volatility would be in the trend of waving up. Though this year there is a heavy pressure from the supply, the market has already consumed previous bearish thoughts due to the increasing of supply. In the future, any bullish news would support the market somehow.
DCE soybean no.1 contact rebound a bit, but still could not get rid of the weak situation. Prices in the producing area fallback RMB 20-30 per ton; the purchasing price is around RMB 4240-4380 per ton. Currently both the purchasing and selling are weak, since famers are not active to sell and merchants think the future market will be bearish. DCE soybean meal rally at the end of trading; the supply of spot is stable; northeast cut the quota. Lately once the imported soybean has arrived, the spot price will continue its downward trend. Moreover, the operation rate of oil factory may increase, which makes the pressure on spots supply become even stronger. We suggest that for DCE soybean meal occasionally short; for short position of soybean No. 1 contract occasionally stop-profit.


Yesterday PP futures opened at a low price and waved; it opened at RMB 8764; the trading volume increased 3740 lots to 200000 lots; the holdings increased 1494 lots to 166000. The propylene price dramatically dropped $20, the average price is $1005.5 per ton. In terms of device, currently the rate of operation stays the same; no sign of another time production restriction. For spots, yesterday among most markets pp price was relatively stable with slight fallback, which is around RMB 50 -150 per ton. Petrochemical north China, east China and middle China etc. most regions have dropped their ex-factory price again; it seriously hammered investors faith; most merchants holds bearish thought towards the future market, so their main strategy is to sell as much as possible in order to lower the inventory.
For instance of the wire drawing price, today's mainstream of North China bid in RMB 9950-10250 per ton, East China mainstream quotation around RMB 10150-10400 per ton, South China mainstream quotation in RMB 10250-10500 per ton.
Judging from the fundamentals it is still weak. Yesterday it end up of cross; the upper bound subdued by former downward trend and the moving average line; the lower bound is support by former low point; former break is beyond the line; the price is on the cross roads of neither goes up nor down. We suggest that investors who hold short positions should continue holding them.
                                                                                    Dong LV (Investment Certificate NO. TZ008452)