Jakarta, CNBC Indonesia – The Jakarta Composite Index (JCI) shot up 2.58 percent last week to 5,052.663. This Indonesian market is proud of being able to book a perfect week, aka strengthening for 5 days in a row.
The Job Creation Law (Ciptaker Law) passed by the House of Representatives (DPR) last Monday, became the trigger for the strengthening of IHSG from within the country.
The Ciptaker Law is considered to be able to improve the investment climate in the country, so that it can attract large capital inflows.
Meanwhile from abroad, hopes of a fiscal stimulus in the United States (US), triggered the strengthening of Wall Street which also raised global stock markets including the JCI. In trading Friday (9/10/2020) Wall Street regained its strength, and posted its best week since August.
Wall Street’s performance will certainly be a positive sentiment for JCI today, Monday (12/10/2020).
Meanwhile, from within the country, DKI Jakarta Large-Scale Social Restrictions (PSBB) which are relaxed have the potential to bring the JCI to fly high.
The DKI Jakarta Provincial Government has decided to reduce the emergency brake policy gradually and enter the Transitional Large-Scale Social Restriction (PSBB) with new provisions for the next two weeks, from 12-25 October 2020.
In this PSBB Transition, the mall is allowed to open until 21:00, with a maximum visitor capacity of 50% of normal days before the PSBB or before the corona virus pandemic strikes. Restaurants are also again allowed to serve meals on the spot or dine in.
In addition, cinemas have also reopened with a maximum audience capacity of 25%.
Thus, the shares of issuers engaged in the retail sector as well as issuers managing shopping centers, aka malls, have the opportunity to strengthen today.
However, it should still be aware of any profit taking due to the sharp strengthening last week. Moreover, several Asian stock exchanges and Wall Street Futures are in the red zone this morning.
Technically, the JCI is getting away from the “armature” level of 5,000, thus providing momentum for strengthening.
The stochastic indicator on the daily chart is now starting to enter the overbought area (overbought).
Graphic: Daily IHSG
Stochastic is leading indicator, or indicators that initiate price movements. When Stochastic reaches the territory overbought (above 80) or oversold (below 20), then the price of an instrument has the opportunity to reverse direction.
Meanwhile, the hourly Stochastic indicator is also in the territory overbought, so there is a risk of correction.
Grafik: IHGS 1 Jam
The level strengthened to 5075 to become the closest resistance, if the JCI is able to break it has the opportunity to strengthen to 5,100. A break above this level will open a chance for strengthening towards 5,163 which is 50% Fibonnaci Retracement. It pulled from a September 2019 high of 6,414 to this year’s weakest level of 3,911 on the daily chart.
Meanwhile, the closest support is at the level of 5.030, if the JCI is broken there is a risk of correction to the psychological level of 5,000. The correction will deepen to 4,970 if the psychological level is broken.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)