Falling Like A Brick
JCI nosedived as woes in the emerging markets sent most stocks southwards.
The index fell through layers of supports like a brick and despite it bounced off lows, it failed to bounce high enough to bring some relief.
Political turmoil in Ukraine, Turkey and Thailand, in addition to Argentina’s economic problems have set off a similar wave of selling just like what happened last year when the Federal Reserve first dropped the hint for the then upcoming stimulus removal.
Removing the stimulus has been considered as getting ready for interest rates hike, and this put the USD-based assets in favorite positions compared to the emerging economies’ assets, which were the darlings of the market during the ultra-accommodative period of the Federal Reserve.
New Home Sales Fell
US new home sales fell 7% in December from a month earlier. The fall was worse than the consensus which had expected a 1.9% decline after a 3.9% decline in November.
In Germany, IFO index for business climate was slightly higher in January at 110.6, up from 109.5 and better than the expected 110.0. Current assessment also up from 111.6 to 112.4, while expectations index rose from 107.4 to 108.9.
Technically Speaking...
JCI tanked and ended below its EMA band as selloff continued on Monday.
As the support at 4,430, 4,380 as well as 4,335 were all broken, the next big support comes at 4,161, followed by 4,109 and 3,837.
While fairly limited, upside potential is seen as the index will aim to reclaim its area inside the EMA-band around
No new recommendations for now as we prefer to see the market stabilizes a bit after a major sell-off back on Friday.
Day Ahead
Selloffs in the emerging markets were ill omens for the index. The FOMC meeting will be in focus, while developments in the emerging economies engulfed in turmoil (such as Brazil, South Africa, Argentina, Turkey and Ukraine) are also going to be watched keenly by investors.
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