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.