Morning Dew - 13 February 2014

Debt Limit Off

Yellen’s speech put off worries of aggressive tapering by the Fed. This builds positive tone for the stock market, including for JCI. With no major shifts in the Fed’s monetary policy, the domestic theme will center on the earnings reports.

US House of Representatives agreed to suspend the debt limit until March 2015. Without such move, the US’s ability to borrow may not last beyond Feb 27th.  In the past, similar attempts to prolong the borrowing ability tend to involve eleventh hour decisions which created market uncertainties. No suspense this time around.

USDIDR dipped to 12,115 per USD from 12,174 per USD. While the greenback takes a step back, the USDIDR remains vulnerable.

China’s Trade

China’s trade surplus widened to $31.9b, as exports rose 10.6% (yoy) while imports gained 10%. Both were better-than-expected and showed that China is gradually back on its feet again

Post-Yellen’s remarks the market will await the retail sales data coming out of US. Sales in January is expected to stay the same as December sales, slowing from 0.2% gains seen in prior month. Jobless claims is also due and expected to change slightly from 331k to 330k.

Technically Speaking...

JCI continued its attempt to clear the resistance zone around 4,480-4,510, but still the advance stayed capped so far.

The 200-day EMA at 4,420-4,430 will be the interim support area for now, followed by recent lows at 4,320 and 4,286. Next big support comes at 4,161, followed by 4,109 and 3,837.

Nearest resistance is seen at around 4,480-4,510. Once 4,510 is cleared, 4,592-4,610 will be the next hurdle to crack.

Both volume and MACD were up and this looks promising at the moment, especially that the index has managed to hold on its gains above the EMA band. Near-term, the outlook is biased to the upside.

LPKR has been added to the reco list. The reco aims to enter between 900-940, with stop set below 850 and target set at 1,100.

Day Ahead

As most, if not all, key market catalysts have been out, the JCI will be more influenced by earnings reports for FY2013. US session on Wednesday saw the market taking a breather, so Thursday for JCI is likely to be neutral with positive bias.

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