Morning Dew - 24 February 2014

Breaking the Barrier

JCI broke the 4,610 key resistance and the index subsequently surged higher to end the week on a firm footing at 4,646. The break set up a good prospect for the coming week.

Some positive catalysts recently released were the improving CAD (hence lessened the odds that BI will raise rate again), the improving IDR, Bank of Japan’s continued stimulus, and Fed’s Janet Yellen’s statement that the tapering policy will continue on.

USDIDR fell from 11,850 to 11,772 per USD.

Proponent of Tapering

Richard Fisher, the Dallas Fed President said that it’s hard to argue that further expansion of central bank balance sheet has had “much efficacy.” That is why, he said added, that he has been a strong proponent of Fed’s tapering of stimulus and that he would continue to advocate such move.

US existing home sales fell 5.1% to 4.62 million (yoy) in January, worse than the expected decline to 4.67 million. Markets however, have dismissed less impressive data and blame weather as the culprit.

Technically Speaking...

JCI finally broke through its resistance at 4,610 and went to as high as 4,650 to end the week on a firm footing.

Recent peak-turned-support at 4,510 will remain as the nearest support line for JCI, whereas the 200-day EMA at 4,440 will be the subsequent support area. Nearer support will be at 4,550 as this was the congestion area before the index rallied.

Nearest resistance is seen at around 4,650, Friday’s high. Meanwhile, 4,791 will be the next hurdle to crack should 4,650 gives way.

Volume slipped a bit while MACD continued to push up, maintaining the upside potential at the moment. For now, the outlook is biased to the upside although recent gains could spell a near-term correction.

Week Ahead

There’s still no key catalysts expected in the coming week. Hence, the JCI is likely to continue to build up upon the success of the break of 4,610 resistance on the back of more FY2013 earnings releases. As the Dow gained fell on Friday, the JCI is prone to correction next Monday.

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