Ill Omen
- Reduced growth forecast for Europe has weighed on the market sentiment even as the service sector showed improvements in US and China.
- Individual performance of stocks will find cues from the continued releases of earnings.
- Expectations of Fed tapering seems to be taking a backseat for now. For now, there is no strong case for a tapering to start this year. Most likely after another budget debate early next year.
Service Sector Improved
- US ISM index for service sector was reportedly up to 55.4 in the same month from 54.4 a month earlier as well as beating the consensus of 54.0.
- China also saw an uptick in its service sector as reported by HSBC/Markit. The index was up from 52.4 to 52.6.
- Unfortunately, European Union slashed the euro-area growth forecast for 2014 to 1.1% against its prior forecast of 1.2%. Unemployment is expected at 12.2% in 2014, up from 12.1%.
Technically Speaking...
- JCI slipped back below its EMA band at 4,470, setting a grim outlook for the index.
- The loss of the EMA support at 4,470 had switched its role back to resistance. Key support now lies at 4,313/4,314, followed by 4,207.
- Outlook turned negative as the price slipped below 4,470, MACD continued to push deeper into the negative area despite a diminishing volume spotted.
- We have added SMRA into the recommendation pool. The stock aims at 1,250 while risking a drop below 880. Entry area is set around 1,010-1,030.
Day Ahead
Unfavorable US session pointed at more downside on Wednesday. Ahead of the release of nonfarm payrolls data on Friday the market is likely to drift lower unless a significant positive catalyst pops out. Domestically, earnings season will continue to set individual path of related stocks.
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