Morning Dew - 1 October 2013

Key Points

• Growing concerns over the potential government shutdown in the U.S. have taken its toll on the global markets, including the JCI. JCI tumbled to as low as 4313 before it settled the day at 4316. All sectors fell, led by baisc industry which shed over 4%. US politicians have until the start of October to strike a budget deal to avert the shutdown. Up to now, both sides seem to be deadlocked over the issue.
• US Republicans want to delay Obamacare while making other changes to the health law, something that is opposed by the Democrats. If now deal is struck, a shutdown will ensue and in the end about 800k federal employees will be placed on temporary unpaid leave. Currently, it is estimated that about 1.4 percentage points may be shaven off the 4Q13 growth should a shutdown occurs.
• No change in the recommended stocks. MDLN and PGAS are leading the way with 4.41% and 1.96% gains, respectively, while MLPL has been downed by the most.
• Critical support for JCI now lies at 4207, as below this level the risk of accelerating decline will be heightened, opening the door to revisit 3837. Upside, the resistance lies at 4444 and subsequently at 4545. Essentially, the shutdown issue may be damaging in the short-term, but it is expected that the politicians will eventually strike a deal to solve the problem or at least to give more time for them to renegotiate.

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Morning Dew - 30 September 2013

Key Points

• Doubts concerning the start of Fed's tapering as well as the budget debate in Washington were the two major catalysts weighing on the JCI last this week. The index ended 3.5% lower, positioning it back below the EMA envelope on the daily chart, which is viewed as negative for the coming week outlook. Nevertheless, the downside is also seen limited as bad news have been mostly out, leaving the only risk coming from budget showdown at Washington.
• Among key data set for release next week are the China Manufacturing PMI for September, US ISM for both manufacturing and non-manufacturing sectors in September, and as usual, the nonfarm payrolls for September. In addition, some Fed speakers are also scheduled to be held. Bernanke, Yellen, Stein, and Powell are set to speak and the market will search for fresh clues over the timing of the Fed's beginning of its tapering.
• There is no change in view on the active recommendations. So far, only MDLN and PGAS are giving positive results. MLPL is the worst performer so far as it trailed 6.33% off its entry point while ARNA got down 3.41% at the moment. No new additions of recos for now.

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Morning Dew - 27 September 2013

Key Points

• JCI ended flat on Thursday as the selling pressure subsided for now. The outlook still remains gloomy however, as the index now hovers below its EMA-band. Nearest resistance is now seen at 4470 while the next one is at 4575. On the other hand, 4353 will serve as the current, nearest support line, followed by 4207. For Friday, the index is still seen under pressure, but is expected to continue to stay around 4300-4545.
• Positive and negative catalysts met on Thursday as jobless claims number for the recent week has been reportedly declined unexpectedly while budget battle fought in Washington still offer no resolve, risking the US another shutdown (which had happened several times before). Despite the current impasse, the budget deadlock is most likely to be resolved soon, just like what happened earlier last year.
• No change in the recommended stocks. MDLN and PGAS are leading the way with 1.47% and 0.98% gains, respectively, while ACES broke even and ARNA being the worst performer with 5.68% losses for now.
• As the week draws to a close, we expect Friday will be a rather quiet session as the market may prefer to wait until the budget deal is agreed, or at least offering clearer picture. Today's trading range is expected between 4300 and 4500.

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Morning Dew - 26 September 2013

Key Points

• JCI stayed under pressure during the mid-week, taking the index to pierce the support at 4444 and closing in towards the lower trading band at around 4300. Foreigners continued to stay on the sell side while agriculture sector was the sole survivor of today's plunge. Regionals were mixed with the Hang Seng index ended relatively flat while Nikkei fell. Unless a major positive catalyst shows up, we risk the index to drift even lower until the Fed itself removes the uncertainties it had cast upon recently.
• Economic data on Wednesday offered little significance as Fed talks have been put under the microscope. Durable goods ticked up 0.1% in August, while last month's orders fell 8.1% from June. Excluding transportation, durables also slipped lower. Other data showed that new home sales climbed 7.9% month-on-month in August, reversing earlier slump. Thursday data will feature pending home sales and the US GDP. Jobless claims is seen rising from 309k to 325k.
• Risk of government shutdown in the US has put up a burden onto the market. According to the Treasury Secretary Jacob J Lewis the measures being used to avoid breaking into the Fed will be exhausted no later than October 17th. This is not the first time we see such budget fight at Washington. This time around nothing will change, that the deal will be eventually struck, and everything will be just fine.
• ACES got its entry price filled this Wednesday and ended flat. Other recos were in the red as the JCI drifted lower. There is no change in view nor setup for now.

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Morning Dew - 25 September 2013

Key Points

• Another day underwater for the JCI as the index continued to be under pressure after conflicting commentaries from Federal Reserve board members cast uncertainties over the central bank's policy direction. Another bout of budget debate in Washington is also going to weigh on the market sentiment currently. Positive catalyst came in from the Middle East as Obama and Rohani had an interest in closing the rift between US and Iran.
• From the economic front, the US consumer confidence was reportedly declined in September from 81.8 to 79.7. Another data due was the US house price index which saw a 1% increase in July from the prior month. More data to be released on Wednesday are the durable goods orders for August, which are seen falling 0.2% after a 7.4% drop in July. Excluding transportation items the orders are seen up 1%, reversing a 0.8% fall in prior month. US new home sales data are also to be released soon and expected to show a 6.6% rise after a steep 13.4% decline in July. No significant impact is seen coming from these two data however, as the market will be more keen to look for hints from the Fed regarding the timing of the first tapering.
• William C. Dudley, the Fed Bank of NY chief in his speech on Tuesday said that the Fed may reduce the pace of its QE in 2013 depending on how the economy performs. If all is well, the tapering will start later this year. Dudley's colleague, James Bullard had previously said that there is a possibility of the process to begin as soon as next month, although the amount of reduction may be less than initially expected (consensus was at $10bn.). As no fixed timing has been set, uncertainties will linger around and this is a no positive catalyst for investors. 
• JCI dropped to its 50-day EMA support at 4444 while its advance has been so far capped by both 100-day and 200-day EMA around 4545, as expected. The intensity of the decline was somewhat diminishing at the moment. This suggests that we may see a limited downside potential in the short-term, but on the other hand lacking positive catalysts to push the index higher. We stick to the current trading range between 4444-4545 with a wider band between 4800 and 4300. AISA has found its entry while ACES remains unfilled but still active at the moment.

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Morning Dew - 24 September 2013

Key Points

• JCI fell, tracking the falling Dow as comments from Federal Reserve officials brought uncertainties over the timing of the beginning of Fed's tapering. The rout reversed however, as the JCI ended at the top of its intraday trading range, albeit still incurring losses. China flash PMI estimate for September was the likely trigger as the preliminary reading showed a rise to 51.2 from August reading of 50.1. It was a six-month high, a good sign for the world's second-largest economy.
• Three Fed officials spoke recently and as the market searches for clues on the timing of the first move in reducing the stimulus, such speeches are to be followed closely. William C. Dudley from the NY Fed said that policy makers must 'forcefully' push against economic headwinds as the US economy has yet to show 'any meaningful pickup' in momentum. Elsewhere, Dennis Lockhart from Atlanta Fed said that monetary policy should focus on creating a more dynamic economy.  At the other point of view, Dallas Fed President Richard Fisher said that the Fed has harmed its credibility by failing to deliver the reduction last week.
• JCI fell to as low as 4512, just in between the EMA envelope of 4444-4545. We may see a limited attempt higher to retake the 4791.76 previous high but the attempt may be out of steam amidst the Fed uncertainties. On the other hand, the strong reading of Chinese PMI may lend support as the index may find it at around 4404.74. There is no more additional recommendations for now as the last two (AISA and ACES) remain unfilled.

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Morning Dew - 23 September 2013

Key Points

• JCI ended the week with a strong footing after the index rallied on the Fed's decision to do nothing. The move got almost the entire market wrong-footed and realizing that the uncertainties have returned to the Fed's timing of its first tapering, investors flock back to stocks at the expense of the greenback. Around the globe, stocks were also largely positive and for the week the Dow has gained 0.49%. Friday saw a steep drop however, as the St Louis Fed governor Mark Bullard said that a small tapering may be in place in the next month's meeting.
• Based on the poll taken after the Fed's decision, 24 out of 41 people surveyed said the first tapering may have to wait until December. Bullard's statement on Friday however, added uncertainties over the timing of the first tapering as it could be done as early as next month. In the meantime, the US is facing another risk of shutdown as the US Treasury is seen out of capability to borrow funds in mid-October. A deal must be struck by the end of this month to dodge such scenario. Based on historical records, this shutdown issue is most likely not a big danger at all. Last December's fiscal cliff issue turned out to be non-event as deal was struck. This time it won't be any different at all.
• There is no change in view on the active recommendations, but we are adding ACES and AISA back into the pool. ACES is recommended for entry at 700-730, with stop set below 630 and target set at 900; AISA is recommended at 1280-1300 with stop set below 1120 and target at 1460. We may have some turbulence this Monday as JCI may track the Dow's weakness last Friday. 

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Morning Dew - 20 September 2013

Key Points

• JCI soared on the Federal Reserve's decision to do nothing on the stimulus. The index climbed over 4% while both LQ-45 and IDX30 were both ended the session up by more than 5%.Regionals were also up, as well as European stocks. For the Dow itself, the gauge fell 40.39 points or 0.26% lower, following a strong rally a day earlier.
• JCI managed to breach its key resistance at 4563 and arrived at 4791.76 before it settle down at 4670.13. After the jump, JCI now finds itself above the EMA curves, while its MACD and volume spiked higher. Resistance now lies at 4791.76, followed by 4917. Support on the other hand, is seen strong around 4563.
• Bernanke's decision to do nothing has pushed back the expectation of higher rates in the US. As the Fed chief wants to wait for a little while longer, his Fed presidency is going to end in 2014. His likely suceessor is Janet Yellen, the number two at the Fed right now. It is likely that Bernanke will make its first move before January.
• No change in view on the recommended stocks. Soaring JCI brought all five recommendations off the red zone with the LCGP hovers around its entry price while PGAS inched closer to its objective. Friday is seen positive but still capped after Thursday's rally. The index is prone to profit-taking, but downside pressure should be well cushioned at 4563.

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Morning Dew - 19 September 2013

Key Points

• As the FOMC meeting enters its second and the last day, JCI tumbled 1.2% as investors move towards the sidelines. The fall took the index to as low as 4448.08 before it settled the day at 4463.25. Regional indexes such as Hang Seng and Nikkei also ended mixed. Mining stocks gained 1.39% while the consumer goods sector became the biggest loser of the day.
• The Fed jolted the markets as the FOMC decided to maintain its asset purchases at $85b. The Fed said that the decision to taper off some of the stimulus is largely depends on how good is the economy and that there is no set timetable for the Fed to start taking away the stimulus. The surprise had the stock market ralled, gold jumped as well as a rally in the treasury yield.
• Fed's decision to delay the reduction in the stimulus program could set the JCI to return to the 5k area. The delay may also hurt USD and thus, could help boost IDR. Support will remain at around 4200 while near-term the index will find support at 4289. Upside, the major resistance remained at 4563 and then 4779.
• No change in view on the recommended stocks. PGAS now the only one gaining while the others (ARNA, MDLN, LCGP and MLPL) are still in the red.

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Morning Dew - 18 September 2013

Key Points

• JCI took a pause ahead of the Fed's two-day meeting. The index managed to resume its ascend to as high as 4537 before it got pushed back and settled the day with a mere 0.1% decline. Resistance at 4562 is considered key to but so far it managed to hold. Should this key resistance managed to be breached, the index may aim for 4700 next and subsequently back to 5k.
• Factors in play right now are definitely the FOMC meeting which is set to conclude its 2-day meeting on Wednesday night, while Summers out of Fed candidacy has been cheered by the markets. Janet Yellen is now a strong contender for the Fed chief position.
• Next after LCGP recommendation, MLPL also in at 395. By the end of Tuesday's session only PGAS was still on the green. The other four recommendations were red. There is no change in view right now, no additional recos as well, as we opt to wait until the FOMC event has passed.

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Morning Dew - 17 September 2013

Key Points

• JCI soared as the market cheered Larry Summers' withdrawal from his bid to become the Fed chief replacing Bernanke. Summers is viewed as less tilted towards accomodative monetary policy while the market favors Fed's number 2 Janet Yellen to be Bernanke's successor. Elsewhere, both the US and Russia have agreed on a plan to remove chemical weapons off Syria. JCI gains brought it back closer to the key resistance at 4563.
• As the index burst past the resistance at 4373, the rally brought it within spitting distance to its next key resistance at 4563. At this key resistance also lie both 100-day and 200-day EMAs. This could mean that we may see stiff resistance before the index could open up more potential to rise back towards 4700 and later on, 5000.
• Our new addition to the reco pool, LCGP, had its entry price filled at 250. Currently still at the losing side alongside ARNA, the other two recos are still holding out in the green: MDLN and PGAS. We are adding another reco today: MLPL, which aims at 470 with risk set on a break of 315 while the suggested entry price between 385-395. This is a no buy-and-hold trade given the nature of MLPL. Once the objective is reached, it is very recommended to exit the trade. Else, simply use trailing stop technique if aiming for more gains beyond 470.
• US Consumer Price Index (CPI) is due for release on Tuesday, and the year-on-year core inflation in August is expected to tick up from 1.7% to 1.8% while the headline inflation is seen to have trickled down from 2.0% to 1.6%. Month-on-month, the core gauge is seen to have slowed from 0.2% to 0.1% while the headline number is seen steady at 0.2%. FOMC meeting is to start tonight and will end tomorrow with the Fed is expected to start trimming its bond purchases by $10b.

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Morning Dew - 16 September 2013

Key Points

• JCI finished higher for the week as negative impacts from domestic catalysts waned - but not gone - for now. The market focus has increasingly shifted towards the upcoming FOMC meeting which is expected to be the first move by the Federal Reserve to chip away its monetary stimulus off the market. At the moment, the market consensus is on the $10 bn reduction of stimulus and should the Fed delivers more than this, the market will view that the Fed is aggressive in eliminating the entire stimulus, hence the market could tumble again. On the contrary, should the Fed delivers less than the consensus, the market will perceive that the accommodative period of monetary policy is going to stay longer than initially thought and this could be a more friendly catalyst for stocks as the Fed is perceived as not in a hurry to remove its stimulus. We believe that the Fed will deliver exactly $10bn as expected and is likely to drop a hint that there will be more in the coming FOMC meetings until the entire stimulus has been removed.
• As expected, the resistance at 4373 proved to be resilient and the index is seen to attempt another go to crack this resistance. Should the resistance fails to hold, the next crucial one will be at 4563. This is the end of wave 1 of a lesser degree and should this give way as well, it could be concluded that the downside is secure and that the market will take the JCI back above its 100 and 200 day moving average (currently around 4545). On the downside, the support for JCI will be at 4206. Below this support will bring a retest of level 4k again.
• After we completed the JPFA trade on Thursday, we got PTPP trade completed as well on Friday. This leaves the active recos to three: ARNA, MDLN and PGAS. In addition, we have started a new reco: LCGP. LCGP has been resilient during the recent market slump. We have its key support at 230, so below this should signal exit. On the resistance side, we have 265, 275, 285, and 295. Entry price is suggested at 245-250, with target at 285.

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Morning Dew - 13 September 2013

Key Points

• JCI edged higher on Thursday while two other indexes – LQ45 and IDX30 -  inched lower. Another 25 basis points of tightening was announced by Bank Indonesia ahead of the key FOMC meeting later this mid-September. Consumer goods sector fell the most (-2.71%) while agri and mining which were hammered during previous session managed to bounce higher. The market is expected to remain cautious ahead of the Fed meeting.
• US jobless claims released on Thursday was largely ignored as the reading might not be accurate enough due to computer systems upgrades in two states, resulting in fewer applications which got reported. On the Syrian issue, the proposal for Syria’s surrendering its chemical weapons is still about to be discussed between the US and Russia. US stocks finished slightly lower as markets continue to eye on the next FOMC meeting.
• Currently, the Fed is seen to reduce its bond buying each month by $10 billion to $75 billion. Still, what the market wants to know is no longer about whether the Fed will start to taper in September, but rather over how big is the cut.
• Among the recommended stocks, JPFA finally met its target price at 1300. Meanwhile, ARNA remains in the red for now. 

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Morning Dew - 12 September 2013

Key Points

• Despite it managed to get through the resistance zone around 4373-4383, JCI failed to hold onto its gains and slipped back to 4349.42. The fall came in after a strong rally off 4012 and considered so far as profit-taking and also as the FOMC meeting is getting closer. The majority of the market participants now have expected the Fed to start reducing its stimulus this month, but there is still some degree of uncertainties regarding how big will the Fed start its stimulus reduction.
• The rise to hit 4404 risked completion of the corrective uptick of the JCI. If so, we are facing a risk of another downward pressure towards the previous key supports at 4012.. Near-term however, the downside is likely to be limited to 4206.95. On the resistance side, 4404.75 will be the near-term resistance for now, while the next big thing will be the prior low at 4563.
• No changes in view on the recommended stocks at the moment. ARNA now the only one still underwater while the others have seen green. Thursday is expected to be positive as the US stocks ended on a firm footing overnight. US consideration over Russian proposal on Syria has also responded positively as this could avert the US military attack on Syria.

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Morning Dew - 11 September 2013

Key Points

• JCI soared nearly 4% on Tuesday, tracking gains from the Dow overnight and as economic data released last Friday had boosted the ailiing sentiment. Arms confiscation offer deal was also among the positive catalysts as war will be averted that way. Agriculture and mining stocks were hit however, as improving rupiah condition is seen negative for both sectors. The next big thing for the market will be the FOMC meeting which is expected to deliver its first reduction of stimulus, the prelude for higher rates in the US and eventually the world.
• JCI took out the resistance at 4206.95 rather easily and has been approaching its subsequent target at 4373. This was a key support which now turns into resistance, which is also within proximity of the wave equality target at 4383. Once JCI clears 4373-4383 the next hurdle will be 4563. Beyond the latter will suggest that the worst could've been over for the index. Downside, the index is expected to be well-supported at 4206.95.
• There's still no additions to the recommendations list, but so far the best performing reco is PTPP (+10.53%), followed by PGAS (+5.88%) and JPFA (+2.61%). ARNA and MDLN are still underwater with 1.14% and 1.47% declines, respectively. No change in view at the moment.

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Morning Dew - 10 September 2013

Key Points

• JCI opened the week on a firm footing as the index soared almost 3%. The rally was not unexpected as the reserve data released late on Friday boosted ailing sentiment and pushed the rupiah up against the USD. Regionals also fared well at the start of the week, with Nikkei gained more than 2% and Hang Seng index gained 0.57%. While the data was better than expected, the market will want to see if things will hold in the months ahead and not just a one-hit wonder.
• The rally took the JCI close to its resistance at 4206.95 but the rise was capped at 4191.26 for now. With the positive foreign buying and with the echoes coming from last Friday's reserve data, the JCI is expected to continue its ascend on Tuesday, eyeing the resistance at 4206.95 first and subsequently, 4373. Constraints may come from the looming FOMC meeting as well as potential military intervention by the US on Syria (which could boost oil price in the short-run).
• No changes in view on the recommendations, but the climb is expected to continue after the US stocks also ended the beginning of the week on a positive tone.

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Morning Dew - 9 September 2013

Key Points

• JCI fell throughout the week as rupiah depreciates and as the FOMC meeting this September gets closer and closer. Rupiah depreciation has been a major drag for Indonesian stocks, despite mining and agriculture stocks turned out to fare better. On the contrary, Nikkei and Hang Seng as well as the Dow and its European counterparts were gaining strength last week. 
• US economy added 169k jobs in August, less than the expected reading of 180k but way above the July's number which was revised to 104k. Unemployment rate however, ticked down to 7.3% from 7.4% as more people left the labor force. US stocks ended mixed with the Dow slightly down by 0.1%, the S&P index nearly flat and the NASDAQ index inched higher by 0.03%.
• Retail sales data will be the main focus this coming week as the data will be the last piece of information due just before the Fed's FOMC meeting which is expected to deliver the beginning of its stimulus reduction. Looming intervention on Syria is also going to be gaining attention. Not much to be expected from such military action and the sooner the US delivers, the better for the market.
• Monday is expected to be green as the forex reserves data released late Friday is expected to boost sentiment. However, the looming FOMC meeting is seen capping the advance for now. Nearby support is seen around 4000-4020 while the resistance lies at 4172 at the nearest and subsequently at 4206.95. A breach of 4206.95 will be a sign that the corrective rally may resume and will aim for a test of 4373. Below 4k will risk drop to 3978 and 3924.

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Morning Dew - September 6th 2013

Key Points

• Under pressure rupiah led to the decline of JCI on Thursday. The index fell to as low as 4015 after it went up to as high as 4123. The fall stopped just around the support area of 4022-26 and subsequently the index settled the day at around 4050. While there is a possibility that the JCI will hold above 4000 for now, should this support fails to hold the index may slump further to 3936-3978. Alternatively, a successful rally beyond 4206 will revive the possibility for a rally to 4373.
• US data released on Thursday showed that private sector added 176k of new jobs in August, slightly below the expected 180k and down from July's reading of 198k. Jobless claims were also down slightly from 332k in the prior week to 323k during the week ending August 31st. Elsewhere, factory orders fell 2.4% in July after it rose 1.6% in the prior month. The fall was less than expected decline of 3.4%. Also, US non-manufacturing sector gained from 56 to 58.6 in August.as ISM data exceeded the expected reading of 55.0.
• Nonfarm payrolls data will be the key release this Friday.The payrolls data is expected at 180k, up from 162k last July. Unemployment rate however, is seen stable at 7.4%. Beyond NFP, the market will set its eyes on the FOMC meeting in the middle of September.
• Strong influence from the USDIDR exchange rate will once again sets the tone for Friday. Continued weakness in IDR will risk for another fall in JCI. No change in view on the recommendations and no new additions as well for now.

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Morning Dew - September 5th 2013

Key Points

• Ahead of the release of the key nonfarm payrolls data and also ahead of the US military intervention on Syria, stocks gained in the US and Europe, but mixed in Asia. JCI fell again after an attempt to crack the resistance at 4206 failed. The poor domestic data as well as weakening Rupiah have been pressuring the index recently and this situation is expected to stay for a time being.
• JCI's technical outlook suggests that the index may fall again to around 4022-4026 to complete the zigzag corrective move from 4206.95. Once there, JCI may try again to make its way to 4373. Near-term the resistance will remain at 4206.95 while below 4022/26 will set another decline towards around 3936-3978.
• US ADP employment report for August is set for release on Thursday. The data could serve as a preview to the upcoming NFP data set for release next Friday. Another key data is the ISM index for the service sector which measures the US service sector in August. With the better-than-expected reading of the manufacturing sector data, a similar reading on the service sector will provide another boost for the market.

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Morning Dew - September 4th 2013

Key Points

• JCI bounced off from its support at 4058 and jumped 1.53% to end the session at 4164.01. The rally still unable to break through the prior high at 4206.95 however, but once it can clear this resistance the door towards a test of previous support-turns-resistance at 4373 will be open once more. Strings of bad data might have taken their toll on JCI recently, but as the market ran out of negative catalysts the index may gradually recover instead. The next big thing for investors will be the release of non-farm payrolls data next Friday as well as the FOMC meeting at the middle of September.
• US stocks gained after it was shutdown on Monday due to public holiday. ISM for manufacturing sector data showed a better than expected reading in August. The index ticked up to 55.7 from 55.4, against the consensus of 54. Construction spending also gained the most in the last four years as residential real estate increased.
• There is no change in view of the recommended stocks. All but ARNA has made their ways to the greens, however. PTPP and PGAS are currently gaining 8.42% and 6.86%, respectively, while JPFA and MDLN are up 3.48% and 1.47%, respectively. ARNA is still down 3.41% by the end of Tuesday's session.

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Morning Dew - September 3rd 2013

Key Points

• String of poor economic data took its toll on JCI on Monday. August PMI was reportedly declined to a 15-month low of 48.5 from 50.7. This means the manufacturing sector has entered a period of contraction again after the last time it was below 49.7 last January 2013. Inflation data was also released this Monday and the M/M CPI was up 1.12% in August, less than the expected 1.23% increase. Y/Y, August CPI was up 8.79%, also below the expected 8.94%. Still, the core CPI was up 4.48% Y/Y, more than last July's 4.44% increase. The big hit was delivered by the trade balance data however, as exports fell 6.07% in July (Y/Y) despite it was up 2.37% vs. prior month. The resulting impact of the export data was on the trade balance which amounted to a deficit of $2.31B, a lot worse than the expected deficit of $353m.
• On the global economic front, China and European PMIs were showing better-than-expected results, lending support to the global stocks indices. Manufacturing sector continued to expand in China as August PMI ticked up to 50.1 from 47.7 while UK PMI jumped to 57.2 from 54.8.  Germany and France as well as Swiss continued to struggle in August, but Italy and Eurozone saw some improvements. Tuesday will see the PMI for service sector to be released in China while US ISM for manufacturing sector is also scheduled for release. US markets was closed on Monday for national holiday.
• The recovery attempt fell short of resistance at 4239-4261 as the JCI only reached the intraday high at 4206.95. Subsequently, the index fell to as low as 4061.64, just above the 38.2% retracement level of the entire rebound from 3837 to 4195. There is a risk of another attempt downwards on Tuesday and should 4058 fails to hold, we could see a test of the next support at 4016 and subsequently, 3973.

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Morning Dew - September 2nd 2013

Key Points

• August ended with major exchanges suffering from steep decline. The JCI plunged over 10%, the same goes with the LQ-45 and IDX30 indexes which fell 11% and 12%, respectively. US and European stocks were also under pressure throughout the week. In the end, the Dow fell 4%, S&P 500 slipped 3% while the tech-heavy NASDAQ edged  1% lower. Currently, the major issue surrounding the market is the upcoming Federal Reserve meeting which is expected to deliver a reduction in stimulus for the first time and will be the first of the series. Another lingering issue is the potential strike on Syria by US despite the absence of most of American allies.
• The first week of September will be featuring key data such as the US nonfarm payrolls and ISM reports for both manufacturing and non-manufacturing sectors; while the European PMI data are also set for release. In Asia, China will release their PMI data as well. Still, the key event in September will be the FOMC meeting in mid-month. It's no longer a question of whether there will be a stimulus cut or not, but rather, a question of how much to be tapered off from the current stimulus package.
• The reco performance nosedived in August as six recos got their stops triggered. Steep decline of JCI brushed off IMAS, BBRI, WSKT, ACES, ASRI and ULTJ out of the pool, leaving just five outstanding currently (ARNA, MDLN, PGAS, JPFA and PTPP). As the downside pressure is expected to ease off, the performance gets better during the last few days in August. No change in view and no recos added for now.
• Technically speaking, the recent rally has been supported by a rising volume, so it is expected to resume some more this coming week. Resistance lines come in at 4239-4261, followed by 4373 and 4563. Downside is seen supported by the retracement levels of the rally from 3837 to 4195. These are 4110, 4058, 4016, 3973 and 3921. The fall of the Dow on Friday may see the JCI to step back a bit to 4110 or 4058 at the most.

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