Morning Dew - 24 April 2014

CAD Disappointment

JCI slipped below 4,900 as the index continues to struggle to find incentives to move higher – or to move lower. 

As the presidential election nears, the political dynamics are expected to gain intensity and are likely to swing the market mood.

China’s manufacturing sector continued to contract in April as preliminary PMI data showed that the index only inched higher to 48.3 from 48.0 seen in March. This will be the fourth time in a row that the index stands below the 50 mark, which separates between contraction and expansion.

USDIDR continues to climb to 11,590 from 11,486 seen on Tuesday following the comment from BI’s Governor Agus Martowardojo. The Governor said that current account deficit (CAD) may have exceeded 2% of GDP again in 1Q14 after it stood at 1.98% of GDP in 4Q13.

BTEL, ELSA

BTEL recorded a net profit of IDR210,732 million, reversing a IDR97,473 million of losses in 1Q14. Revenues fell to IDR390,500 million from IDR582,497 million, however. Strong gains on forex were the key behind the net profit.

Despite a fall in revenues to IDR918,296 million in 1Q14, ELSA booked a net profit of IDR54,162 million, up 56% from the same quarter a year earlier.  Assets and liabilities fell 2.35% and 7.42%, respectively.

Technically Speaking...

JCI continued to flirt around the 4,933 resistance level as consolidation takes the index nowhere.

While the star pattern has failed to be confirmed so far, the next one developing on the daily chart is the head-and-shoulders pattern with the neckline projected around 4,750 or just above the 50-day EMA. The left shoulder is at 4,903, the head at 4,933 and 4,916 is so far the right shoulder. Volume shows decreasing pattern from the left shoulder to the right one, adding credibility to the pattern.

JCI needs to break through the nearest resistance seen at 4,933 to negate the H&S pattern. Higher, subsequent resistances lie at 5,000 which is the psychological resistance and later the projection target at 5,063.

Neckline at around 4,750 is the nearest support, while key support lies at 4,661. 

MACD declined, moving away from the zero line whilethe RSI curve has fallen as well, heading towards the neutral area around 50%.

Day Ahead

Doldrums are expected to continue as politics remain the key catalyst in the near future for JCI. Meanwhile, 1Q14 reports are seen flowing as we approach the end of the month. US stocks fell overnight, but most likely a temporary setback after a string of consecutive gains.

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