Morning Dew - 24 December 2013

Awaiting Santa

IMF has been encouraged by recent budget deal and the start of Fed tapering program as both had sent removed some elements of uncertainties surrounding the market. IMF boss Christine Lagarde said that it is raising US economic outlook given recent developments. Nevertheless, no new projections were mentioned by Lagarde, but IMF’s last projection on US economy was a 2.6% growth next year in October.

Domestically, volume seems to be on the decline as we’re approaching the Christmas holiday. JCI will have a shortened week this week and next week as well. Unless Santa is coming to pay a visit, we’re bound to end stuck around the current level around 4,200.

Rosy Data

US household spending gained 0.5% in November, accelerated from 0.4% gains in October, in line with the consensus. On the other hand, household income gained 0.2% in November after a 0.1 drop in October. Still it was below the consensus gains of 0.5%.

University of Michigan index of consumer sentiment also up from 75.1 to 82.5, although less than expected reading of 83.

Technically Speaking...

JCI continues to gyrate between 4,109-4,282 as we approach the Christmas holiday. Lack of fresh fundamental catalysts may continue until the year closes. 

The nearest resistance is spotted at 4,282, followed by 4,331. On the flip side, the support is seen at 4,109 with subsequent support at 4,012.

MACD is struggling to defend its footing above the zero line, while the RSI has been fluctuating around the neutral zone. So far, the bullish divergence structure remains intact but the index needs a jump to confirm the pattern.

Recent pick-up in volume has unfortunately, faded away. Overall, the bullish potential has slowly losing form and unless the bulls strike, the bears will roar through the year end.

Day Ahead

Despite positive assessment by the IMF on the US economy, the direct impact on the JCI should be limited. Reiterating the view over two central banks, the Federal Reserve and Bank Indonesia seem to be walking on different policy paths. Nonetheless, gains in Dow could still boost sentiment on JCI.

Click here to download the full update (PDF)