Morning Dew - 23 July 2013

Key Points

• JCI struggled at the start of the week as it failed to climb past 4740 prior peak and instead fell back to reach its first-line support at 4679 (4677). This raised a concern that we may see a deeper correction of the recent rally from 4433 to 4740. The retracement points of this rally are spotted at 4660, 4611, 4571 and 4531 with 4482 as the most distant point. Examining the structure of the current wave c of B, we are most likely within the wave ii of c, with expected terminus at around 4582 (this points at the significance of 4571) or around 4482-4495 under a more pessimist scenario. Nevertheless, we need to crack the key 4740 to negate the bearish pressure in the near-term. JCI is seen range-bound from 4677-4740.
• Japan PM Shinzo Abe's victory over the weekend vote received a positive response early at start of the Monday session. With this victory, Abe is seen to have more power to implement his growth strategy. It remains to be seen whether he will succeed in doing so, but the market so far is confident.
• Not much to be seen from U.S. this week except from corporate calendar which is packed with corporate earnings. Monday saw minor gains from the US indices, which translate into a positive Tuesday session for JCI, especially after a dip.

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Morning Dew - 22 July 2013

Key Points

• JCI ended the week up by 1.97% as the rebound continues. The upside seems to be capped at 4740 however, which is also the 100-day EMA. It's going to be a make or break situation for JCI this coming week as the upside strength has been weakening as indicated by the declining volume. First line support comes in at 4679 while the more serious support comes at 4635. As for the upside, targets come in at 4740 first, then 4848 and subsequently 5124. It is likely that the current wave c of B will end up at 4848 considering lack of positive catalysts.
• Lack of macro catalysts will shift the investors' attentions to the corporate earnings in the US. This could mean another limited fluctuations of JCI in the coming week. So far, the Fed's Bernanke's assurance that there's no preset timing of the end of QE3 has been receiving positive response but keep well in mind that that does not mean the Fed won't start the reduction of stimulus this September. We could still see the stimulus getting reduced in September and removed completely one year from now and that the rates to start rising in 2015.
• TELE has been out of the recommendation pool as it fell below its stop loss point last Friday. So, at the moment there are six active recos and two recos pending for entries (ASRI and ROTI). BBCA remains on top of the list, followed by WSKT.

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Morning Dew - 18 July 2013

Key Points

• JCI took a late surge to arrive at 4679 near the closing bell. This signifies that the wave B of the correction is likely to extend to the next Fibo target at 4848. We seem to be at the third leg of wave B (wave c), once we clear 4679, we will set eyes on 4848, our next Fibo target, and subsequently 5124. Crucial support stays at 4373.
• One reco has been cancelled as AISA has already arrived at its price target at 1430. So, we now have two pending for entry (ASRI and ROTI), one at par with the entry price (IMAS), one losing position (TELE) and four in the green (BBCA, BBRI, WSKT and MAPI).
• In his testimony before the House Panel, the Fed chairman Ben Bernanke said that the Fed has no preset timing on exiting the QE. This indicates that the FOMC will keep on watching the economic data flow before deciding to reduce its stimulus program. Several key indicators mentioned were employment outlook and inflation. These two are key factors for the Fed at the moment.

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Morning Dew - 17 July 2013

Key Points

• JCI ended slightly higher after failed to breach its resistance at 4679. This signifies that the wave B of the correction remains in progress. We seem to be at the third leg of wave B (wave c), and this means the recent peak at 4679 is key to confirm this assumption. Once cleared, we will set eyes on 4848, our next Fibo target, and subsequently 5124. Crucial support stays at 4373.
• We have MAPI added into the pool of recos today as it reached its entry point at 6950. We now have six recos filled and another three awaiting to be triggered. BBCA, BBRI and WSKT are currently in the green while IMAS stays neutral and two are in the red (TELE and MAPI).
• Hawkish comment from Kansas City Fed Chief Esther George sent the stocks down along with poor result coming from Coca-Cola Co. KO's sales volume missed estimates as economic growth slowed. George stated that the US is on the right path for economic recovery and thus cutting the pace of stimulus are appropriate as inflation seem to be moderate, hence the interest rates should not be held too low for too long. Elsewhere, industrial production grew 0.3% in June after being stable in May.

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Morning Dew - 15 July 2013

Key Points

• JCI finished the week 0.66% higher, rebounding off recent low of 4403. Both LQ-45 and IDX30 also bounced and gained 1.75% and 1.79% throughout the week, respectively. Ben Bernanke's reassurance that the US economy still needs the stimulus brought a temporary sigh of relief. From the domestic front the Bank Indonesia raised its rates by 50 basis points to 6.5% as the central bank delivers a preemptive strike against potential jump in inflation after fuel prices were raised recently and as the dollar gained strength against rupiah. Across the globe, the stock indexes ended the week firmly, setting for another follow-up the coming week.
• While the market rejoices as stocks climbed, the technical outlook still urges a caution. The fallout to 4403 has put an end to the wave b of B, which means the current wave is unfolding the wave c of B. The first objective has been reached at 4678 and the next one is 4848. With the wave B can reach to as high as the top (or even exceeds) of wave A, we can even see the index to go to 5124. Still, with so many negatives around, 4848 is the most reasonable target at the moment. On the downside, 4403 and 4373 will be the crucial supports for the index.
• One thing to keep in mind, Bernanke said that the U.S. economy still needs the stimulus, but he did not say that the Fed is reconsidering its plan to taper off the amount of stimulus. In addition, Fed Bank of Philadelphia President Charles Plosser stated that the Fed should begin tapering in September, while James Bullard from St. Louis Fed said that the cut back should wait until inflation accelerates towards 2%, the Fed's target inflation.

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Morning Dew - 12 July 2013

Key Points

• Bank Indonesia raised its rates by 50 basis points to 6.5% along with the deposit facility rates by 50 basis points to 4.75%, but maintained the lending rates at 6.75%. The move was a surprise for the market which didn't expect the central bank to deliver such a steep hike. After the initial jolt, the JCI steadied and finished the day up by 2.8% with the foreigners side flipped from having a net sell to a net buy for the day.
• With the downside looks pretty secure for now, we maintain that the index is gunning at the completion of wave C which targets 4678, 4848, and up to 5124. Key support remains at 4373. No key news are expected at the moment, so we are likely to see the index continuing its ascend to the aforementioned resistances on Friday. Still, as we are most likely within the B wave, we are not out of the woods yet.
• US jobless claims were up more than expected during last week, but this was largely caused by seasonal factor. The FOMC minutes on the other hand showed that about half of the participants of the FOMC meeting wanted to stop the bond purchases by the end of this year. Bernanke himself in his speech said that the US economy needs a highly accommodative monetary policy for the foreseeable future.
• We have added five new recommendations to the list: ASRI, ROTI, AISA, MAPI, and WSKT. Refer to the table for the detailed trade setup.

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Morning Dew - 11 July 2013

Key Points

• JCI bounced as expected after struggling to defend the crucial low at 4373, helped by the data from China which suggested that China is facing a tough slowdown as government tries to put a brake on the credit growth. Anticipating the speech from Ben Bernanke as well as the release of FOMC minutes on Wednesday, the market seemed to be cautious, thus capping the upside potential.
• Exports out of China tumbled in June by 3.1% vs. a year ago while imports also fell 0.7%. The market had expected exports to have gained 3.7% while imports were forecast to have increased by 6%.The poor reading indicates that the Chinese authority may still have to wait before loosening up their monetary policy.
• Nothing new coming out of the Fed's minutes as well as from the Bernanke Chief. Looks like we are indeed, targeting the end of wave C and this could be at 4678, 4848, orc up to 5124 .On the downside, the support will be at the crucial 4373. The index is seen resuming its rebound but the upside is likely to be limited.

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