Morning Dew - 20 December 2013

Beyond Tapering

Market participants cheered the Fed’s decision as the JCI jumped on Thursday after the Fed decided to start the tapering cruising on the slow lane.

Small reduction of stimulus means the Fed has given some time to the economy to recover, especially from the job market side. Given the Fed’s emphasis on this side of the economy, the job data will gain prominence in the coming months.

Thursday saw the jobless claims spiked to 379k last week, way above the consensus drop to 336k. As the tapering has started, poor job data is likely to receive poor reaction as the market may be having second thoughts on whether the US economy can withstand the tapering process, especially its job market. 

Mitra Insurance Set for IPO

PT Asuransi Mitra Maparya Tbk. set its price offering at IDR240-280 on Thursday. The offering will also include warrant as sweetener. Book building will commence between 19-27 December 2013 with expected effective date on 31 December 2013 and listing date on January 16th 2014.

Technically Speaking...

Market cheered the Fed’s decision as JCI jumped to as high as 4,257, just shy off its nearest resistance at 4,282. The index settled at 4,231 however, but there is still ample room for the upside until the end of the year.

The nearest resistance is spotted at 4,282, followed by 4,331. On the flip side, the support is seen at 4,109 with interim support at 4,172.

MACD is struggling to regain footing above the zero line, while the RSI is also heading towards the neutral zone. So far, the bullish divergence structure remains intact and this is in line with the fundamental outlook.

Moreover, despite the tiny progress since the low at 4,109 was established, the volume has picked up nicely, supporting the near-term bullish outlook.

Day Ahead

As the jobless claims put a hold on the Dow’s gains on Thursday, JCI is also seen on a pause or even seeing some profit taking on Friday. The only hurdle will come from the domestic side as BI’s policy is considered as the sole threat for now. Still, as long as the economic indicators look timid, there should be hardly any risk of another rate hike on the domestic front.

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