Morning Dew - 25 September 2013

Key Points

• Another day underwater for the JCI as the index continued to be under pressure after conflicting commentaries from Federal Reserve board members cast uncertainties over the central bank's policy direction. Another bout of budget debate in Washington is also going to weigh on the market sentiment currently. Positive catalyst came in from the Middle East as Obama and Rohani had an interest in closing the rift between US and Iran.
• From the economic front, the US consumer confidence was reportedly declined in September from 81.8 to 79.7. Another data due was the US house price index which saw a 1% increase in July from the prior month. More data to be released on Wednesday are the durable goods orders for August, which are seen falling 0.2% after a 7.4% drop in July. Excluding transportation items the orders are seen up 1%, reversing a 0.8% fall in prior month. US new home sales data are also to be released soon and expected to show a 6.6% rise after a steep 13.4% decline in July. No significant impact is seen coming from these two data however, as the market will be more keen to look for hints from the Fed regarding the timing of the first tapering.
• William C. Dudley, the Fed Bank of NY chief in his speech on Tuesday said that the Fed may reduce the pace of its QE in 2013 depending on how the economy performs. If all is well, the tapering will start later this year. Dudley's colleague, James Bullard had previously said that there is a possibility of the process to begin as soon as next month, although the amount of reduction may be less than initially expected (consensus was at $10bn.). As no fixed timing has been set, uncertainties will linger around and this is a no positive catalyst for investors. 
• JCI dropped to its 50-day EMA support at 4444 while its advance has been so far capped by both 100-day and 200-day EMA around 4545, as expected. The intensity of the decline was somewhat diminishing at the moment. This suggests that we may see a limited downside potential in the short-term, but on the other hand lacking positive catalysts to push the index higher. We stick to the current trading range between 4444-4545 with a wider band between 4800 and 4300. AISA has found its entry while ACES remains unfilled but still active at the moment.

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