Morning Dew - November 25th 2013

Beyond 16k

The DJIA has made it to the 16k mark, but what lies ahead? For sure, the Fed’s tapering is on the table and it won’t take a long time until it starts, most likely between February-March. The Fed however, won’t be in a hurry to push up rates as well. Rather, the central bank will prefer to wait for quite some time for the economy to provide stronger life signs before making its move.

With December closing in, there’s a good chance that the upside push is about to continue, given that December is usually a good month for stocks. Hence, a good potential for the Dow translates to a good potential for JCI as well. Even if the JCI lost its correlation with the Dow, positive investors’ mood from abroad could at least limit the downside for JCI.

Housing and Confidence Data

US home sales and housing starts as well as consumer confidence data are set for release the coming week. All are of no critical significance at the moment.

With the fog of war surrounding the Fed’s tapering has somewhat cleared by now, the next big thing on FOMC will be on its December meeting. However, the Committee is seen to maintain its policy and only to make a move at the start of 2014.

Technically Speaking...

JCI ended the week on a weaker footing as DJIA’s ascend to 16k hardly helpful to lift up domestic sentiment. 

Support is seen at 4,284, for when this support line is broken, the way lower will be re-opened and we will risk another fall towards 4,133 en route to 3,837.

The fall on Friday was accompanied by a jump in volume, not a good sign for the bulls. However, the RSI has started to curl up, forming a potential failure swing, which could spell rebound.

Overall, worsening technical outlook exposes the index to more weakness throughout the coming week.

Week Ahead

Policy divergence between Bank Indonesia and the Federal Reserve will loose up some correlation between JCI and the DJIA. While domestic rate hikes are still on the cards this year, the FOMC is expected to stand pat until Fed succession is completed. Poor technical outlook coupled with policy uncertainties will make JCI’s move upside to be laborous instead of a smooth one.

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