Morning Dew - 7 October 2013

Key Points

• Stocks retreated this week as the US government shut down after the politicians could not agree on the budget. While this is not the first shutdown in history, the market concerned over the longer-term impact on the economy. On the other hand, the US economy is also facing a growing threat of a debt default because by October 17th the Treasury will be running out of money and that the debt will exceed the $16.7 trillion cap. On Friday, the House speaker John Boehner said that he won't allow the US to default on its debt, lifting stocks as it trimmed earlier losses.
• Nonfarm payrolls data for September has been postponed due to the shutdown. This implies that tapering will be highly unlikely to happen in October. Other than lack of hints from the labor market, the budget disagreement also brings uncertainties for investors. The Federal Reserve is unlikely to be adding such uncertainties through a tapering when the FOMC meets at the end of October.
• There is no change in view on the active recommendations. So far, only MDLN and PGAS are giving positive results. MLPL is the worst performer so far as it trailed 7.59% off its entry point while ACES got down 6.85% at the moment. No new additions of recos for now.
• Technically speaking, the chart outlook for JCI remains worrisome. The index is still hovering below the EMA band while the RSI took a dive on Friday. Support lines lie at 4313, followed by 4207. The latter is a crucial support which if broken can squeeze the index back to 3837. On the upside, the EMA band between 4440 and 4535 are the nearest resistance area while 4791 is the most crucial one.

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