Morning Dew - 11 November 2014

Screeching Halt

JCI slipped further on Monday as lack of significant catalysts put pressure on the index. The US nonfarm payrolls slowed in October, trailing the market consensus and reducing the earlier optimism.

Automotive Industry Association (Gaikindo) released its data on domestic car sales which showed that sales have fallen by 6.3% to 104,916 units in October 2014 (yoy), taking the cumulative number of sales for the first ten months of 2014 to 1.04 million units, only 1.6% higher from the same period last year. On the other hand, the motorcycle sales also declined, taking the total units sold for the Jan-Oct period to 6,760,557 units, just 3.5% above same period last year.

Slowing economy, weaker currency as well as the anticipation of higher fuel prices were cited as the factors behind the decline in auto sales.

USDIDR slipped further on Monday, ended the day at 12,138 from 12,149 seen last Friday.

Forex Reserves, ISAT

Forex reserves only inched higher in October to US$112b from last month’s US$111.2bn. Income from oil and gas exports as well as rising income from forex deposits in BI were cited as the factors behind the rise.

ISAT booked revenues of Rp17.72tn in 9M14 compared to 9M13 when it booked Rp17.79tn. Losses incurred by the company shrunk to Rp1.32tn vs. Rp1.76tn last year.

Technically Speaking

JCI started the week soft, staying submerged below 5k but it remains within the confines of 4,900-5,100 trading range.

Losing the 5k support could lead to more downside as the index is now eyeing at the bottom end of the range around 4,900. In-between, the 200-day EMA at around 4,920 will be the subsequent cushion for the JCI. Below 4,900, support area lies at 4,835-4,840 (prior congestion area).

On the upside, former support at 5k now turns as resistance, while 5,100 will be the next interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI fell again.

For Tuesday, expect the trading range between 4,900 and 5,000.

ECII has been added to the list of recommendations.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Monday’s decline reinforced the downside potential of the JCI. Technical outlook however, points at more downside to come instead.

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