Market View - August 20, 2009

Global markets plummeted yesterday led by China as investors concern the tighter lending would hurt China’s economic growth. The Shanghai Index plunged 4.3% (-125.30 pts) to 2,785 while Hangseng fell 1.73% (-352.04 pts) to 19,954. Nikkei slid 0.79% (-80.96 pts) to 10,204. Lower commodities prices dragged JCI down by 2.53% (-59.23 pts) to 2,277. US markets rebound after oil climbed to $72/barrel as the Energy Department report showed US stockpiles dropped 8.4 million barrels last week. DJIA gained 0.7% (+61.22 pts) to 9,279 while Nasdaq added 0.7% (+13.32 pts) to 1,969. Technical indicators such as stochastic, OBV and MACD confirm JCI is in a pullback period. Yesterday JCI closed around its MA20. Our third support today is at 2,140, slightly below a 61.8% fibonacci retracement at 2,170. We still view our market would take another pullback and it would be quite volatile. Our range for JCI today is 2,248 to 2,328. Our picks are Telekomunikasi Indonesia (TLKM, Sell, R-8,800, S-8,100), Indofood (INDF, Sell, R-2,625, S-2,200), Astra International (ASII, Sell, R-31,000, S-28,000), Bumi Resources (BUMI, Sell, R-3,225, S-2,850) and Perusahaan Gas Negara(PGAS, Sell, R-3,425, S-3,125).