Indonesian Stocks Moving Average Signals Further Gains: Technical Analysis

Indonesia’s stock index, the best performer among Asia’s 10 biggest markets this year, may extend last week’s record high after its moving average graph showed a signal crossover. 

The Jakarta Composite index rose 1.6 percent this month to close at a record 3,117.72 on Aug. 20. Its moving average convergence divergence graph, or MACD, on Aug. 19 crossed the nine-day exponential moving average line from below, indicating the rally is sustainable, said Rafdi Prima, a technical analyst at PT Mandiri Sekuritas in Jakarta. 

“The momentum has returned to the buy side so there’s a possibility of further gains,” Prima said in a phone interview today. “The signal itself isn’t that strong but enough to maintain the buy momentum.” 

The Jakarta Composite was little changed at 3,119.29 at the midday break, staying above its 50-day moving average of 2,981.87, which is another positive signal, Prima said.

The measure has gained 23 percent this year after the central bank kept borrowing costs at a record low for a 12th month and companies reported better-than-expected first-half earnings. The government forecasts Southeast Asia’s biggest economy will expand 6 percent this year from 4.5 percent in 2009. 

Overseas investors bought a net 2.47 trillion rupiah ($275 million) of Indonesian stocks so far this month, almost double the 1.3 trillion rupiah in the seven months to July 30 period. Source: Bloomberg