Morning Dew - 17 December 2013

Closing In

As we move closer to the Fed’s meeting date, the JCI fell further as jitters persisted. Regionals key indexes such as Nikkei and Hang Seng were also down as investors opted to take away some bets off the table.

Reiterating my view, while December move is possible, large scale-back is not expected. It is likely that the Fed will start with a small cut, probably just to show the central bank’s commitment to taper off the monetary stimulus.

No action is also on the table. The Fed may want to wait until more data coming in just to make sure that the tapering won’t be premature. Even if this happens, the market seems to be prepared with such decision.

PMI Ticked Up

US PMI for December showed a minor uptick from 54.3 to 54.4, less than what the market had expected. China’s PMI on the other hand, slowed to 50.5 from 50.8, also less than what had been expected. No major impact from both data however, as the market’s attention seemed to be fixed straight at the FOMC meeting.

US CPI is due on Tuesday, with the core YoY CPI seen steady at 1.7% while the headline inflation is seen accelerating 1.3%. MoM core is seen at 0.1% while headline MoM CPI is seen up 0.1% in Nov.

Technically Speaking...

JCI continued to crash, tripping the key support at 4,161. This does not look good for the index as the next line of defense will be the 2013 low at 3,837.

Prior support at 4,161 has now turned to resistance, followed by 4,200.

MACD has now curled back to the negative zone and descending deeper. The RSI however, has not made any new lows, so this could be a setup of a bullish divergence pattern which could spell rebound for the index. The problem is, we could as well revisiting the 2013 low first before we see the rebound.

Two new entries were filled: SAME and ALTO.

Day Ahead

Rebound coming out of the US stock market could mean a breathing room for JCI. Tuesday is seen positive, but whether it will be a dead cat bounce or not is remain to be seen. Uncertainties surrounding the Fed decision on 18th will remain the key theme at the moment.

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