Morning Dew - 10 April 2014

Not An Easy Win

PDI-P is seen winning the legislative election, based on the latest quick count results (93% counted) from several institutions. Jokowi’s party gained some 19%-plus of total votes while at the second place is Golkar with some 15% of total votes. Prabowo’s Gerindra is at the third place with 11-12% of total votes. PKB and SBY’s Democrats are roughly tied around 9-10% each.

Initially expected to win rather easily, PDI-P may find itself in a need to forge some alliances with other parties. It looks as if the key will be with whom Golkar will ally itself with. With so many possibilities out there, it’s too soon to conclude what the political map will be after the legislative election. The final result of the official count will be on May 9th 2014.

BI Rates, FOMC Minutes

BI held rates steady on Tuesday, as expected. Recent improvements on the economic fundamentals have presented no basis for another rate increase, and this is expected to be the case for some more months ahead, especially as inflation is seen to remain under control.

US FOMC Minutes released overnight brought some relief on investors as the minutes showed that the majority of FOMC saw the need that rates may need to remain low even after they are raised.

Technically Speaking...

JCI ended slightly up on Tuesday as investors anticipated the legislative election scheduled for Wednesday. The index finished up 0.37 points or 0.01%.

The nearest resistance is seen at 4,930, the recent intraday high ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063.

Recent multi-top formation at 4,900 will be the interim support, followed by the price gap at 4,769 and the next one at 4,661.

Toppish formation around 4,900 has been broken as volume has regained its strength.

MACD curled higher and managed to resurface above the zero line while the RSI continued to move higher.

Day Ahead

As the dust settles over the Wednesday’s election, the bulls will be boosted by FOMC minutes released overnight but will be capped by the fact that no parties were able to win the election by more than 20% of total votes (so far). This means political bargaining among parties will determine the next political alliances which will shape the upcoming presidential election in July.

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