JCI.. Prepare for a little correction..

The Jakarta Composite Index (JCI) has gained around 13% this month. Is this rally could be maintained?


There is a strong resistance around 1440 level that has to be passed to maintain this strong rally. The index has failed to pass this level on early January this year. If we look at the stochastic indicator, we would conclude that obviously the index is in an overbought condition. It has risen for 5 days in a row therefore I would expect a little correction in a next few days. In my view, the index would be in a range of 1350 - 1470 this week.

While IDR is still in a good shape against the USD at 11400 per dollar, I would expect that the rally could be maintained in a medium term. My concern is while we are approaching the presidential election some traders would take a safer position so I am expecting there would be some liquidation in the near future. I expect the index not to pass the important resistance at 1440 level this week or two but in the medium term this rally positively could be maintained.

Bumi Resources (BUMI) menuju 950 ?

Saham BUMI berpeluang bergerak menuju resistance berikutnya di sekitar 950. Jika dalam beberapa hari ini volume transaksi BUMI menunjukkan peningkatan signifikan dan juga mampu ditutup diatas level 800, maka indikasi penguatannya semakin jelas. Jika dilihat secara teknikal, ada indikasi terbentuknya formasi bullish triangle. Saya amati sejak awal minggu lalu, broker asing seperti CS,ML,DB dan ZP sudah terus menerus melakukan akumulasi saham BUMI. Ekspektasi saya sebelum bulan Mei 2009 BUMI mampu menuju 950. Sekarang mari kita amati pergerakan saham BUMI..

Prepare for a big rally this week

After a long weekend, the JSX showed a little sign of recovery. At least there are two indications why I would suggest that the Indonesian market would be in a good upward movement this week. The first thing is that the Jakarta Composite Index has managed to close above a crucial level at 1300.22. This close slightly above 1300 indicated that investors and traders are confidence that the market would be starting a rally this week.





The second indication is that in the last few days the USD / IDR has shown a sign of strong resistance around 12000 level. It could be interpreted as a sign that the IDR would not go lower than 12000 level hence foreign investors would be more confidence exchanging their USD to local Indonesian rupiah (IDR) without worrying that the value of their funds would be reduced by the IDR depreciation relative to USD. It would also suggest that foreign investors would be prefer to invest in equity market since the Bank of Indonesia has reduced its benchmark rate to 7.75%, which is not so interesting to invest in Indonesian government bonds.



I also noted that some foreign brokerage firms have been net buy in Indonesian stocks such as Kim Eng Securities, Credit Suisse, UBS, ABN Amro Asia Securities, Deutsche Securities. I would say that with this new confidence in the Indonesian market, our capital market would start a rally this week.