Morning Dew - 15 July 2013

Key Points

• JCI finished the week 0.66% higher, rebounding off recent low of 4403. Both LQ-45 and IDX30 also bounced and gained 1.75% and 1.79% throughout the week, respectively. Ben Bernanke's reassurance that the US economy still needs the stimulus brought a temporary sigh of relief. From the domestic front the Bank Indonesia raised its rates by 50 basis points to 6.5% as the central bank delivers a preemptive strike against potential jump in inflation after fuel prices were raised recently and as the dollar gained strength against rupiah. Across the globe, the stock indexes ended the week firmly, setting for another follow-up the coming week.
• While the market rejoices as stocks climbed, the technical outlook still urges a caution. The fallout to 4403 has put an end to the wave b of B, which means the current wave is unfolding the wave c of B. The first objective has been reached at 4678 and the next one is 4848. With the wave B can reach to as high as the top (or even exceeds) of wave A, we can even see the index to go to 5124. Still, with so many negatives around, 4848 is the most reasonable target at the moment. On the downside, 4403 and 4373 will be the crucial supports for the index.
• One thing to keep in mind, Bernanke said that the U.S. economy still needs the stimulus, but he did not say that the Fed is reconsidering its plan to taper off the amount of stimulus. In addition, Fed Bank of Philadelphia President Charles Plosser stated that the Fed should begin tapering in September, while James Bullard from St. Louis Fed said that the cut back should wait until inflation accelerates towards 2%, the Fed's target inflation.

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