Market View - August 21, 2009

Asian markets rebound led by Chinese stocks as investors expected the US leading indicators would rise 0.7% in July and existing home sales would jump 2.25% in July to 5 millions. Meanwhile oil price, which rose to $72/barrel as the Energy Department report showed US stockpiles dropped 8.4 million barrels last week, became the positive catalyst for commodities stocks. Shanghai index jumped 4.52% (+126 pts) to 2,911 and Hangseng surged 1.88% (+374.63 pts) to 20,328. Nikkei was up 1.76% (+179.41 pts) to 10,383. JCI rebound by 2.23% (+50.89 pts) to 2,328. The Dow and Nasdaq posted gains as positive data from manufacturing and economic indicators released. DJIA added 0.8% (+70.89 pts) gains to 9,350 while Nasdaq was up 1% (+19.98 pts) to 1,989. US leading indicators rose 0.6% in July, slightly below market expectations. Manufacturing in Philadelphia rose to 4.2 in August from -7.5 the month before. We reiterate our view that JCI is in its pullback period and we expect the market would be very volatile in the next few days. Stochastic and MACD indicate no positive signal for JCI to rebound. One positive sign is that yesterday JCI closed slightly above MA20. Our range for JCI today is 2,295 to 2,346. 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), Bank Rakyat Indonesia (BBRI, Buy, R-7,450, S-6,800) and Perusahaan Gas Negara(PGAS, Sell, R-3,425, S-3,125).