Morning Dew - 26 August 2013

Key Points

• Growing concerns over the prospect of Fed's reduction of stimulus dealt a critical blow to the JCI last week. The index fell to as low as 4062 before it settled the week at 4169. Prior support at 4373 now acts as a stiff resistance to beat while on the downside, after the 4062 prior low, other support lines are 4000-4016 area which if, also yield to the selling pressure could see more selloff.
• Economic data in the coming week will feature the durables orders for July, 2Q13 GDP, Chicago PMI for August and the final reading of University of Michigan confidence index. While none of these are critical to create direction for the market, the sentiment is more likely to tilt to the negative side as the FOMC meeting getting closer. Jackson Hole meeting of central bankers yield a differing views on the Fed's plan to reduce its stimulus, but the assumption remains that the Fed will start reducing its stimulus program next September.
• Five stocks remain on the recommendations list, with PGAS being the only one in the green. While the outlook of JCI remains cloudy, the rise of Dow last Friday may provide a brake on the recent slide. Near-term resistance comes at 4305-4306 and afterwards, the key 4373 resistance line.

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