Morning Dew - 5 February 2014

Taking A Breather

JCI continued its decline on Tuesday, tracking the decline in the US and Europe. In addition, the stubbornly high inflation data has raised concern that Bank Indonesia may raise rates again.

From the global front, the woes coming out of the emerging economies continue to be another threat to reckon with along with the market’s expectation on the Federal Reserve’s policy path. After delivering another $10bn cut in stimulus, the Fed is seen maintaining the pace for the coming meetings until the stimulus is completely removed. If however, the Fed accelerates the pace, the market will be under additional pressure whilst a deceleration will be cheered by investors.

USDIDR was slightly down at IDR12,248 per US$ from IDR12,251 per US$.

Factory Orders Down

US factory goods orders fell 1.5% in December. Despite falling, the reading was better than the consensus which forecast the fall of 1.8%.

From the Fed, Jeffrey Lacker, the Fed Bank of Richmond President said that a decline in global stock markets probably won’t deter the Fed from further trimming bond purchases.

US ADP employment survey is expected to report an additional of 195k new jobs in January in the private sector, down from 238k reported in December.

Technically Speaking...

JCI resumed its decline on Tuesday, settling the day at 4,352.26.

Recent low at 4,286 will be the nearest key support line while the next big support comes at 4,161, followed by 4,109 and 3,837.

Continuous pressure has eroded the upside potential of JCI. Nearest resistance is seen at 4,432, followed by another one around 4,480-4,510.

MACD has fallen sharply and currently flirting with the zero line while RSI stays high near the overbought area but starts to crumble.

RALS has been filled at 1,270.

Day Ahead

Recent slowdown in the manufacturing front both in the US and China have been the negative catalysts for the global stock markets. In addition, rekindled woes from the emerging economies due to the Fed’s tapering campaign have put stocks under pressure. As the Dow bounced on Tuesday, the JCI is also seen rebounding from recent losses along with the regionals.

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