Morning Dew - 7 May 2014

Conundrum

Unemployment rate fell in February to 5.7%. The number translates to 7.2 million people and was better than the unemployment rate seen on August last year which was at 6.17%. Unemployment data in Indonesia are released every February and August. About 37 million people are working less than normal working hours, which includes 26.4 million of part-time workers and 10.6 million of under-employed. Agriculture sector holds 40.8 million of people employed while trade sector holds 25.8 million, followed by services which hold 18.5 million.

JCI fell slightly as investors opt to wait for more clarity in political environment. We are closing in towards the official announcement of the legislative election result last month. Overall, the market continues to monitor the political developments ahead of the May 9th official legislative election results announcement.

USDIDR is steady at 11,511.

US Trade Deficit Fell

Trade balance improved in US as March deficit fell to US$40.4b from US$41.9b. The figure was still worse than the consensus of a US$40b deficit. Still it was a slight improvement nevertheless.

Ukraine continues to flare up as clashes with separatists intensify. Casualties fell as Ukrainian military helicopter was shot down by pro-Russian separatists.

Technically Speaking...

JCI continued to gyrate around 4,800-4,850 as the consolidation continues.

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.

MACD declined, moving away from the zero line while the RSI curve continued to turn lower as the odds for deeper setback looms large.

Day Ahead

PDI-P’s presidential candidate Joko Widodo said that his running mate will be announced sometime next week around May 9th 2014, plus minus one day. The official election result will be due on May 9th, which will finally bring clarity to the current political uncertainties. Weaker Dow on Tuesday may put some pressure on Asia as well as JCI’s performance on Wednesday.

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