July In Review

Market Issues

Election Euphoria

Joko Widodo & his running mate, Jusuf Kalla have won the presidential election as the pair won almost 71 million votes (53.15%) against Prabowo Subianto – Hatta Rajasa’s total tally of 62.5 million votes (46.85%). The result which was announced by KPU has been challenged by Prabowo-Hatta and the dispute has  been brought in to the Constitutional Court (MK). The Court will make its final decision on August 21st 2014. The initial announcement has brought euphoria to the stock market, taking the index to as high as 5,165 before it settled the month at 5,088.

Geopolitical Flashpoints

Gaza and Ukraine have become recent geopolitical spotlights. Israeli’s attacks on Hamas have claimed many lives of civilians while the downing of a Malaysian passenger airliner by missile shot by pro-Russian Ukrainian rebels has probably ignited what could’ve been the seed of the next Cold War between the West and Russia. These two events may not deliver direct damage to the market, but worsening conflict may see spillover eventually.

New Stocks on the Block

Five newcomers in July were MGNA, BPII, MBAP, TARA and DNAR. The initial offering price for each of the five were105, 500, 1,300, 106, and 110, respectively. At Rp279 per share, TARA gained the most until the end  of the month as the stock racked up a 163.21% gains over its initial price. DNAR was second placed with 77.27% gains, MGNA was third (+8.57%), BPII was fourth (+5%) while MBAP still in the red as it lost 0.38%.

Fed Stayed On Course

Overseas, the latest Fed meeting showed no change in tapering. By now, the bond buying amount has been reduced to $25bn after the sixth tapering in a row by the Fed. In October, it is expected to remove the bond buying from the market. 

Argentina In Default

Standard & Poor’s put Argentina into default as the government missed its interest payment of $13 billion of structured bonds.

Click here to download the full update (PDF)

Morning Dew - 25 July 2014

The Pause

JCI took a pause as the market is waiting for the next step Prabowo-Hatta will do regarding their rights to bring up the election dispute to the Constitutional Court this Friday. While it is seen as unlikely to be able to change the already announced result, investors seem to prefer to stay cautious over the issue.

Beyond the election, the next composition of ministers  will sap the market’s attention aside from corporate financial reports for the first half 2014 which are being reported at the moment.

China Manufacturing Data showed an uptick in July as the index rose from 50.7 to 52.0, beating the consensus of 51.0.

USDIDR bounced back to end at 11,531 per US$ from 11,498 per US$ on Thursday.

US Data

Initial jobless claims fell to 284k from 303k in the week ending July 19th. The market had expected it to tick higher to 310k.

US Manufacturing PMI published by Market showed slight slowdown from 57.3 to 56.3 in July, against the consensus of a slight rise to 57.5. Above 50 the index represents expansion while below 50 represents contraction.

US new home sales fell again by 8.1% (MoM) in June after a 8.3% drop in May. Consensus forecast a drop by 5.8%.

Technically Speaking...

JCI continues to seesaw on Thursday as the index is trapped between 5k and 5,165.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD turned lower, while RSI has continued to fluctuate around the overbought area but heading lower while volume was slightly lower on Thursday.

SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Prabowo-Hatta still have Friday to bring the issue to the Constitutional Court regarding the election result. While this may hurt sentiment a bit, the majority of the market seems to expect that such effort will be futile and that KPU’s decision will remain legitimate. Also, names to fill in the Jokowi-JK’s cabinet are abound, and this could be the next attraction point for investors aside from corporate 1H14 results which are being announced at the moment.

Click here to download the full update (PDF)

Morning Dew - 23 July 2014

Jokowi-JK Won

Optimism replaced with caution on Tuesday before the KPU announced the result of presidential election. The JCI surrendered its Monday’s gains and settled back at 5,083.52, down 0.85%.

At the end of the day, Jokowi-JK was announced as the winners of the presidential election with 70,997,833 or 53.15% of votes against 62,576,444 or 46.85% of the votes gained by Prabowo-Hatta.

Prabowo-Hatta have 3 days to bring any disputes to the Constitutional Court, and should this happen will drag the finalization of the result for a while longer, opening a door for soft JCI.

On the global front, major stock market indexes rallied but geopolitical tensions coming from Ukraine and the Middle East will keep the upside somewhat limited.

USDIDR fell further to end at 11,531 per US$ from 11,577 per US$ on Tuesday.

US Data

US Consumer Price Index was steady at 2.1% in June (YoY), as expected. Ex-food and energy, CPI slowed to 1.9% from 2.0% (YoY). Month-on-month, headline CPI slowed from 0.4% to 0.3% while the core measure also slowed to 0.1% from 0.3%.

 

Existing home sales slowed to 2.6%  in June (MoM), from 4.9% seen in May, but better than the consensus of 2% gains forecast earlier.

Richmond Fed Manufacturing Index ticked higher in July from 3 to 7, beating the consensus forecast of 5.

Technically Speaking...

JCI erased gains on Tuesday after it turned tail at 5,155, just below the recent peak at 5,165. The index eventually ended the session at 5,083, down 0.85% at the end of the day.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD turned lower, while RSI has continued to fluctuate around the overbought area but heading lower while volume was up sharply.

SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

The announcement of the presidential election result by KPU on Tuesday has passed without any incident, and this will give boost to the JCI sentiment on Wednesday. Still, despite Jokowi-JK’s win, Prabowo-Hatta still have 3 days to bring the issue to the Constitutional Court. If such thing happens, this will bring a drag to the JCI.

Click here to download the full update (PDF)

Morning Dew - 16 July 2014

Mood Swings

JCI gained again on Tuesday as mood swings continues ahead of the real count announcement on July 22nd.

As political landscape remains foggy at best, the market could also find no key catalysts both domestically and globally.

One thing worth mentioning would be Janet Yellen’s recent speech which underlined the Fed’s monetary policy, especially regarding interest rates. According to Yellen during the Senate Banking Committee speech, the US job markets are far from healthy and that the Fed will keep the current loose monetary policy until hiring and wage data show that impacts from financial crisis are gone.

USDIDR gained to end at 11,709 per US$, up from 11,627 per US$ on Tuesday.

Fiscal Stimulus

Indonesia is set to implement its third fiscal policy package in July.

The tax incentives  - which includes tax allowance and tax holiday – will be accompanied by a dividend tax exemption for both domestic and foreign companies. The exemption will apply if the dividend is re-invested in Indonesian assets.

Companies which organize training programs or r&d programs for their workers are also eligible to obtain tax incentives.

Technically Speaking...

JCI fought back and reached 5,070 at the end of the day.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term support is seen at 5,000, followed by 4,900, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD advance picked up again, while RSI has been fluctuating around the overbought area.  Volume was up for a bit on Tuesday, suggesting that the fall might have been temporary and that a rebound is close by.

SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Conflicting quick counts results means that the country will have to hold its breath and wait until July 22nd when the official result will be announced by the KPU. Still, the market seems to be favoring Jokowi-JK’s win. Early euphoria seemed to be short-lived and the mood has returned to somewhat neutral. Stay cautious until the real results are announced.

Click here to download the full update (PDF)

Morning Dew - 15 July 2014

Fading Euphoria

Initial election rally continued to dissipate as the JCI fell for another 0.23% on Monday, the third consecutive decline after the JCI hit 5,165 on Thursday. The fall however, seems to be cushioned by the 5k mark, as the market awaits July 22nd announcement of the election result from KPU.

With various reported suspicions over the voting process and results, it is too early to conclude who the winner is. Moreover, we can actually see on July 22nd the losing side to appeal before the constitutional court. If this happens, the final say could go beyond July 22nd, casting continued uncertainties over the nation.

Elsewhere from the US, the strong performance of US stocks recently has led Goldman Sachs to lift its S&P 500 estimate to 2,050 for this year, 2,100 for 2015 and 2,200 for 2016. According to GS, stocks with lower valuations will outperform the market before the Fed starts to raise the rates.  While earnings will continue to rise, further P/E multiple expansion is not likely to follow. Currently the index P/E ratio is at 18.1x, the highest since March 2010.

USDIDR stayed unchanged at 11,627 per US$, as election uncertainties limit both the upside and the downside potential.

Coal and Cement

Coal production grew 7.6% in 1H14 from the same period a year earlier to 213 million tons. About 75% of the outputs were exported. This year the coal production is aimed to hit 421 million by the end of the year.

Cement sales have trailed the target set for 2014 as the 1H14 sales data showed only 28.9 million tons were sold. The forecast sales were seen at 61 million, or 5.1% above 2013 sales. Economic slowdown has been seen as the factor behind the slowdown.

Technically Speaking...

JCI fell further on Monday as the index retraced its recent gains, but still struggling to hold above the 5k mark.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term support is seen at 5,000, followed by 4,900, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD advance stalled and it ticked down a bit, while RSI has entered the overbought zone and fell slightly.  Volume dipped further on Monday, suggesting that the fall might have been temporary and that a rebound is close by.

We have added SMRA and WSKT to the reco pool. Please check the details on the table below.

Day Ahead

Conflicting quick counts results means that the country will have to hold its breath and wait until July 22nd when the official result will be announced by the KPU. Still, the market seems to be favoring Jokowi-JK’s win. Early euphoria seemed to be short-lived and the mood has returned to somewhat neutral. Stay cautious until the real results are announced.

Click here to download the full update (PDF)

Morning Dew - 14 July 2014

Cooling Down

JCI trimmed its recent gains as investors chose to take some profits off the table amidst uncertainties surrounding the presidential election result. Conflicting quick count results led to both sides claiming victories, and this brought the final answer backwards to July 22nd when KPU announces the official result of the election.

TARA and DNAR debuted on the market. TARA was offered at Rp106 per share during IPO while DNAR was offered at Rp110 per share. TARA finished at Rp180 per share while DNAR at Rp187 per share by the end of their first trading day.

Among several assessments from the recent  BI updates are continuation of global economic growth, albeit lower than prior forecast; slowdown continues on the domestic side during the second quarter; small surplus recorded on the balance of trade, supported by ex-oil and gas surplus; rupiah continued to be under pressure in June while the inflation remained under control. Financial system stability remained solid as supported by the banking system as well as maintained performance of the financial market.

USDIDR bounced to 11,627 per US$, against the prior closing rate of 11,549 per US$.

US Retail Sales & PPI

The coming week will feature the retail sales figure from the US for the month of June. Consensus is pointing at the acceleration of sales from 0.3% to 0.6% while sales ex-autos are expected to gain speed from 0.1% to 0.6%.

Producer inflation and industrial output are the other key data to watch next week. Core PPI is seen up 0.2% in June, against 0.1% decline in May. Industrial production is seen slowing to 0.3% from 0.6% seen a month earlier. 

Technically Speaking...

JCI fell sharply  on Friday as the index retraced its recent gains.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term support is seen at 5,000, followed by 4,900, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD advance stalled and it ticked down a bit, while RSI has entered the overbought zone and fell slightly.  Volume dipped during the decline, suggesting that the fall might have been temporary.

Week Ahead

Conflicting quick counts results means that the country will have to hold its breath and wait until July 22nd when the official result will be announced by the KPU. Still, the market seems to be favoring Jokowi-JK’s win. Early euphoria seemed to be short-lived and the mood has returned to somewhat neutral. Stay cautious until the real results are announced.

Click here to download the full update (PDF)

Morning Dew - 11 July 2014

Election Euphoria

The market cheered the temporary results from several surveys which mostly favor Jokowi-JK winning the election. Prabowo-Hatta’s victory is, on the other hand, supported by four surveys. Nevertheless, the official and legal result will be announced by KPU on July 22nd and between now and then there will still be a cloud of uncertainties on the actual result.

Bank Indonesia’s meeting ended with no changes in its monetary policy. The central bank maintained its BI rate steady at 7.5% with lending facility and deposit facility rates also stay at 7.5% and 5.75%, respectively.

Among several assessments from the BI are continuation of global economic growth, albeit lower than prior forecast; slowdown continues on the domestic side during the second quarter; small surplus recorded on the balance of trade, supported by ex-oil and gas surplus; rupiah continued to be under pressure in June while the inflation remained under control. Financial system stability remained solid as supported by the banking system as well as maintained performance of the financial market.

USDIDR fell further to 11,549 per US$, against the prior closing rate of 11,695 per US$.

China Data, Jobless Claims

China’s trade surplus shrunk to US$31.6bn in June as imports were up 5.5% and exports were up 7.2%. The trade figure was less than the expected surplus of US$36.95bn and also lower than the surplus recorded in May which stood at US$35.92bn.

Elsewhere, US weekly jobless claims were down to 304k from 315k seen a week earlier. The number was better than 315k forecast previously.

No key US data scheduled this Friday.

Technically Speaking...

JCI gapped higher on Thursday, reaching an intraday high at 5,050 before it settled the day at 5,024.71, up 1.46%.

The next resistance lies at 5,091. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD continued its rise above the zero line while RSI has entered the overbought zone.  Volume gained yet still, opening the door to more gains ahead.

Successive rallies however, may spark technical correction, albeit temporary.

WIKA has been benefited by the Thursday’s rally and met its price objective at 2,500. The reco has been closed at 16.82% gains. Now only five recos remain.

Day Ahead

Conflicting quick counts results means that the country will have to hold its breath and wait until July 22nd when the official result will be announced by the KPU. Still, the market seems to be betting on Jokowi-JK’s win rather than staying cautious. Nevertheless, risk of pullback remains, considering the extent of recent rally and some setback in the US and European markets.

Click here to download the full update (PDF)

Morning Dew - 10 July 2014

Taken Hostage

JCI is set to be taken hostage by the heated political situation over who’s winning the election. It looks like that the final count regarding the election will have to wait until July 22nd as various quick counts led to each side winning the vote. After all, the only legal and official count is the one held by KPU. JCI’s gains during the last few sessions may be trimmed as a result of the renewed uncertainties surrounding the election result.

Indonesia forex reserves have increased 0.7% to US$107.7 billion in June as oil and gas revenues as well as forex term deposits gained during the month. At June’s level, the reserves can finance imports and debt payments for six months, twice the minimum level of global standard of three months.

USDIDR fell to 11,695 per US$, against the prior closing rate of 11,787 per US$.

BPII Debuted

BPII became the next debutant on the JSX as the company offered 150 million shares at a price of Rp500 per share on Tuesday. The stock ended its first trading session up Rp50 or gained 10% at Rp550.

Fed tapering seen completed in October as the FOMC minutes showed. If however, this truly happens, the six-month waiting period after the end of tapering will be until around 2Q15. Hence, the first rate rise will be sometime around 2Q15 and 3Q15.

Technically Speaking...

JCI climbed even higher on Tuesday, moving past the 5k mark, briefly hit the intraday high at 5,050 and eventually settled the day at 5,024.71, up 0.72%.

The next resistance lies at 5,091. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD continued its rise above the zero line while RSI has entered the overbought zone.  Volume gained yet still, opening the door to more gains ahead.

Successive rallies however, may spark technical correction, albeit temporary.

Day Ahead

Conflicting quick counts results means that the country will have to hold its breath and wait until July 22nd when the official result will be announced by the KPU. The rallying index may stumble upon this issue and retrace back  its advance. BI rate decision next Thursday will be next key event.

Click here to download the full update (PDF)

Morning Dew - 8 July 2014

A Fine Start

JCI kicked off the week with a firm start as the index scored a solid finish just below 5k mark.

Ahead of the Wednesday presidential election the market seems to cheer the result of the latest debate between the candidates held last Saturday. At the final debate, Jokowi-JK seemed to be getting the upper hand against Prabowo-Hatta. Still, based on various recent polls, the gap between the two presidential hopefuls are somewhat thin, suggesting that it would be a very tough call to make on who will be the victor.

IMF Chief Christine Lagarde said that she expects the global economy to improve in the 2H14 as well as 2015. China will be the engine driving the global economic growth as the country is seen growing by 7 to 7.5% this year. IMF will release its official global economic outlook later this month.

USDIDR fell to 11,787 per US$, against the prior closing rate of 11,887 per US$.

MGNA Debuted

MGNA debuted on the JSX. The newcomer was offered at Rp105 per share during the IPO and it ended its first session up Rp50 at Rp155, a 47.62% gains.  

No key data due on Monday, but jobless claims will be released on Thursday along with wholesale trade data. Jobs data will be watched carefully by the markets as the stronger and the better jobs data will push the expectation of rate rise forward. Nevertheless, we still see the Fed to raise rates in 2H15.

Technically Speaking...

JCI climbed on Monday, breaking away from its recent consolidation range and ended close to 5k.

The next resistance lies at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD continued its rise above the zero line while RSI has continued to march higher approaching the overbought zone.  Volume gained yet still, opening the door to more gains ahead.

Day Ahead

JCI is seen to take a pause after a sizzling climb on Monday as the market essentially awaiting for the upcoming July 9th presidential election. A step back in Dow will also trigger the pause. Beyond the election, all eyes will be focusing on the BI rate decision on next Thursday, a day after the presidential election. BI is seen holding rate steady, however.

Click here to download the full update (PDF)

Morning Dew - 7 July 2014

Calm Before the Storm

JCI finished the week higher as the nation awaits the upcoming presidential election next Wednesday. Elsewhere, in the U.S., the market was closed to observe the Independence Day, but the latest surge past 17k mark has put the mood on the positive side on the global perspective.

As the second quarter has ended, the 2nd quarter economic growth has been expected to grow 5.3% YoY according to Chatib Basri - the Indonesian FinMin -  as household consumption improved along with exports which has improved slightly. During the first quarter the economic growth slowed to 5.21% YoY.

Strong payrolls number last Thursday brought the notion that the Fed may raise rates sooner rather than later, but our take remains that the Fed funds rate may rise sometime in 2H15.

USDIDR fell to 11,887 per US$, against the prior closing rate of 11,963 per US$.

Back in Business

US market will be back in business on Monday after it was off on Friday. No significant data, news or events are expected until Wednesday, when the Federal Reserve will release the FOMC minutes from the Committee’s latest meeting.

Jobless claims will be released on Thursday along with wholesale trade data. Jobs data will be watched carefully by the markets as the stronger and the better jobs data will push the expectation of rate rise forward. Nevertheless, we still see the Fed to raise rates in 2H15.

Technically Speaking...

JCI’s gained on Friday, consolidating its gains above the 50-day EMA. Still, more convincing move is required to completely break out of its current consolidation range. Until then, the risk of getting pulled back down remains on the table.

The next resistance lies at 4,939 followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD continued its rise above the zero line while RSI has continued to march higher towards the overbought zone.  Volume gained, opening the door to more gains ahead.

Week Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. Record Dow will support the index, while all eyes will be focusing on the BI rate decision on next Thursday, a day after the presidential election. BI is seen holding rate steady, however.

Click here to download the full update (PDF)

Morning Dew - 4 July 2014

Job Outlook Brightened

JCI stepped back on Thursday to end at 4,888.74, unable to capitalize on its prior gains. The index returned to its previous trading range as the upcoming presidential election saps investors’ appetite to take on risk.

US Non-Farm Payrolls released on Thursday (as Friday will see US markets closed for national holiday) sent a strong signal that things are going for the better for the US economy. Payrolls shot up by 288k in June after 224k seen in May. In addition, the unemployment rate improved to 6.1% from 6.3% The actual figures trumped the consensus numbers which forecast a 215k advance in payrolls and the unemployment rate at 6.3%.

As a result, economists are now seeing the Fed funds rate to start increasing sooner rather than later. Last month, the Fed officials forecast the rate will be 1.13% at the end of 2015 and 2.5% a year afterwards.

USDIDR bounced to 11,963 per US$, against the prior closing rate of 11,854 per US$.

Dow Above 17k

Dow set yet new historical high as the average finally broke through the 17k barrier.

US Trade Balance also saw improvement in May as deficit shrunk to US44.4bio from US$47.0bio against US$45.0bio forecast earlier.

Non-manufacturing ISM also continues to expand in June despite showing slight slowdown. The index slipped from 56.3 to 56.0 against the consensus of 56.3.

Technically Speaking...

JCI’s advance took a pause on Thursday as the index slipped back to its prior trading range.

The next resistance lies at 4,909, and immediately at 4,939 followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD inched slightly higher managed to finish above the zero line while RSI has continued to seesaw near the neutral zone.  Volume slipped, suggesting we may consolidate recent gains first before breaking out of the consolidation range.

Day  Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. Still, record Dow will support the index on Friday. After several key data were released earlier this week, all eyes will be focusing on the BI rate decision on Thursday next week, a day after the presidential election.

Click here to download the full update (PDF)

Morning Dew - 3 July 2014

On the Edge

JCI gained for another session as the index inched closer to the upper-end of the current consolidation range. It has been moving back and forth inside the consolidation range in the anticipation of the presidential election next week

BI rate event next week, just a day after the presidential election is expected to deliver no changes in interest rate.

Updating the recommendation pool, CSAP trade has been settled at Rp425, almost 50% gains from its entry price at Rp285. Replacing CSAP is MBSS which has also met its entry price at 1,205. This reco aims at Rp1,650 while the risk is set below 1,050.

On the data front, the next big thing comes from the US with jobless claims on Thursday, followed by the release of nonfarm payrolls on Friday.

USDIDR bounced to 11,854 per US$, against the prior closing rate of 11,798 per US$.

ADP Data

Dow set yet new historical high as the average arrived within spitting distance to 17k level.

US private sector added 281k jobs in June, beating the consensus take of 205k additions in jobs. The result was a lot higher than May’s 179k new jobs.

The strong ADP figure may lead to strong payrolls data set for release next Friday.

For now, the payrolls number is seen slightly down to 213k from 216k while the unempoyment rate is seen stuck at 6.3%.

Technically Speaking...

JCI continued to climb and within striking distance to the nearest resistance at 4,909. We may see a follow through on Thursday,  but the index still need more evidence to convince that the downside is over.

The next resistance lies at 4,909, and immediately at 4,939 followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,870, the former EMA-50 resistance now turned as support. Afterwards, 4,800 and 4,775-4,780 where the 100-day EMA lies.

MACD inched slightly higher managed to finish above the zero line while RSI has continued to seesaw near the neutral zone.  Volume slipped, suggesting we may consolidate recent gains first before breaking out of the consolidation range.

MBSS entry price has been filled at 1,205.

Day  Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. After several key data were released earlier this week, all eyes will be focusing on the BI rate decision on Thursday next week, a day after the presidential election.

Click here to download the full update (PDF)

Morning Dew - 2 July 2014

Inflation Slowed in June

JCI gained slightly to end at 4,884.83 as the index continues its consolidation ahead of the coming presidential election.

Inflation data released on Tuesday showed an acceleration in month-on-month data from 0.16% to 0.43% in June. In terms of year-on-year data, inflation actually slowed to 6.7% from 7.32%. Both figures were lower than consensus.

Exports fell 8.1% while imports fell 11.43% in May, taking the balance of trade to a surplus of US$0.07billion, reversing the April’s deficit of US$1.96billion. When exports declined more than imports.

Manufacturing sector showed slight improvement in June, shown by the HSBC Manufacturing PMI which stood at 52.7 against 52.4 seen in May.

USDIDR fell further to 11,798 per US$, against the prior closing rate of 11,969 per US$.

Record Dow

Dow set new historical high as the average arrived within spitting distance to 17k level.

Manufacturing sector slowed slightly in the US as June ISM Manufacturing index fell to 55.3 from 55.4, below the consensus of 55.9.

Meanwhile, construction spending slowed to 0.1% month-on-month in May, from 0.8% seen in April.

Elsewhere in China, manufacturing PMI ticked up to 51.0 from 50.8 in June, while the HSBC Manufacturing PMI slipped to 50.7 from 50.8.

Technically Speaking...

JCI was slightly higher on Tuesday, but still confined within its consolidation range between 4,775-4,909 . The price struggled to hold ground above the 50-day EMA, but need more evidence to convince that the downside is over.

The next resistance lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI has continued to seesaw near the neutral zone. 

We have added MBSS to the recommendation pool, the target price is set at 1,650, with the stop set below 1,050 and suggested entry at 1,195-1,205.

Day  Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. After several key data were released on Tuesday, all eyes will be focusing on the BI rate decision on Thursday.

Click here to download the full update (PDF)