Morning Dew - 17 June 2013

Key Points

• Despite a strong rally on Friday, JCI still lost more than 2% throughout the week. The bounce reached just below the 38.2% Fibo retracement of the entire decline, so it means it will be too soon to declare that the rout has finished. More Fibo resistances spotted at 4793, 4880, 4968, and 5076. In addition, the 100-day and 50-day EMA curves are now act as resistances. Near-term support comes at 4568 with 4510 as the key support. MACD has started to pull up while RSI has started to curl up as well. We may see more upside next week, but keep in mind that we're not out of the woods yet.
• Federal Reserve's FOMC meeting will take the central stage this coming week. The market will be keen to hear what the Fed's going to say next. Will they hand out the timetable for the unwinding of the current stimulus? Or will they stay silent about the matter? It is likely that the Fed will emphasize that the stimulus will be scaled back, but on the condition that the employment outlook gets better. The employment condition is likely to be under observation for three to six months before the Fed starts scaling back the stimulus. They won't remove it however, just scaling it back. Inflation may be mentioned but at the current low level it won't serve as a supporting argument for the scaleback. So, at the earliest, we can expect the scaling back to take place sometime near the end of this year, but no rate increase until 2015 is expected.

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