Morning Dew - 10 June 2014

On A Wrong Foot

JCI took a stab to hit the low of 4,876 as the index started the week on a wrong foot. The consolidation range remains intact however, as the support stays at 4,860-65 while the resistance stays at 5,091.

Strong US payrolls failed to bring support to the JCI as well as the recently announced GDP forecast by Bank Indonesia.

For the second quarter, Bank Indonesia expects the GDP to accelerate from 5.21% in 1Q to 5.3%. Household consumption and investments are seen to be the key drivers behind the acceleration.

USDIDR slipped to hit 11,790 from 11,823 on Monday.

Minor Shock

The government’s plan to raise the electricity tariffs starting July 1st 2014 is seen having relatively small impact on inflation, according to the Finance Minister Chatib Basri.

The plan is expected to deal and additional 0.1% to 0.2% to inflation and is not expected to cause necessary revisions to the government’s inflation target for this year. In 2014, the target for inflation growth is around 5.3% to 5.5%.

The House of Representative has yet to approve the hike proposal so far.

Technically Speaking...

JCI fell to hit 4,876 as the index hit the lower band of its consolidation range.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD slipped again, moving away from the zero line while RSI slipped further as the index sunk. RSI is now approaching the oversold area.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. Incoming domestic and overseas economic data have not bring any significant impact on the market so far. Technically speaking, the JCI is seen nearing an end of its consolidation phase.

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