Awaiting The Fed
JCI bounced off lows as bargain hunting pushed the stocks up. Market participants are now setting their eyes on the Federal Reserve meeting. They are keen to see how much stimulus will be removed this time after the last time $10bn was taken off.
If the Fed opts not to reduce the stimulus, the market may rally. If the Fed opts to deliver another cut in stimulus, it should be neutral except if the Fed taper more than $10bn, the market may respond negatively.
The biggest pressure point for JCI comes from the vulnerability of emerging market economies. Political issues in Ukraine and Thailand, combined with economic issues in Turkey and Argentina have dealt a massive blow to the sentiment recently.
Durables Fell
Durable goods orders fell 4.3% in December, way below consensus number.
Consumer confidence on the other hand, jumped to 5-month high in January. The sentiment index inched higher from 77.5 to 80.7, beating estimate number among consensus (78).
Home prices in 20 US cities were reportedly 20% higher in November. Case-Shiller index was up by 13.7% after a 13.6% gains seen in October.
Technically Speaking...
JCI bounced on Tuesday, ending the day at 4,341.
Recent low at 4,286 will be the nearest support line while 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 struggle to reclaim its area inside the EMA-band around 4,340-4,435.
MACD has fallen sharply and currently flirting with the zero line while RSI stays high near the overbought area.
No new recommendations for now as we prefer to see the market stabilizes a bit after a major sell-off recently.
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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