The Butterfly Effect on Global Market

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The latest DJIA chart reflects strong indications of reversal to positive direction.
Despite suffered by massive sell-off caused by global fear of US recession on most investor perception, the DJIA Chart show that optimism take place.

Climb on DJIA supposed to continue although shadowed by profit taking and sell-off action on pessimism of US economy.

Critical resistance level on DJIA
12.403 (38,2% Fibonacci Retracement)
12.679 (50% FR)
12.956 (61,8% FR)
13.349 (78,6% FR)

Based on the Butterfly Pattern found in the chart, the most critical level to be wary is 61.8% Fibonacci retracement. If that level could pass through, we have the bigger probabilities to see DJIA make new high.

Best regards,

reversal pattern on ^DJI and ^GSPC chart

lattest ^DJI (Dow Jones Industrial Average) and ^GSPC ( Standard & Poor 500 Index) chart showed potential reversal pattern, Bullish BUTTERFLY Pattern and CRAB Pattern.

Other indicators such as Stochastic and W%R showed that ^DJI and ^GSPC
in oversold area and potentially to rebound.









more references about BUTTERFLY and CRAB pattern :
harmonictrader.com
hamfon.com
bizz-forex

Technical Review on IHSG

Recent IHSG direction confused the most of us. There are many apprehensive about market correction among fellow traders and investor. For “buy and hold” performers, they felt that market is overbought and too high, symptoms of correction have seen.

Technically speaking, recent IHSG chart is dilemmatic. It gives positive signal in daily chart, MACD golden Cross. Just the opposite, weekly chart gives negative signal, MACD Dead Cross.





Considering other indicators, such as Stochastic and William%R, IHSG is nearly at overbought area in daily chart. Meanwhile in weekly chart, IHSG already at overbought area.





I think, it is hard to conclude that correction on IHSG is unlikely.

But for the “Trend follower”, as long as a valid confirmation of change on trend direction is not seen yet, bullish in the mind is still intact.

Trend follower used to confirm market direction with Moving Average (MA) indicator, MA10, MA20, MA50, MA100 and MA200.
Currently, IHSG price is above all MA level, which is mean the market is still bullish.

But it is wise to set the cut loss point tightly, in order to reduce loss or save on the hand capital gain if the market direction changes.

I have conviction that market will try and push IHSG to make a new high.
But who knows what happened after a new high occur.

Well, have a safe trading and investing.

January Effect? What Is It ?

Have you heard about The January Effect? What is it?

refer to Investopedia.com, it mean

A general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

The January effect is said to affect small caps more than mid/large caps. This historical trend, however, has been less pronounced in recent years because the markets have adjusted for it. Another reason the January effect is now considered less important is that more people are using tax-sheltered retirement plans and therefore have no reason to sell at the end of the year for a tax loss.


Refer to Wikipedia

The January effect (sometimes called "year-end effect") is a calendar effect wherein stocks, especially small-cap stocks, have historically tended to rise markedly in price during the period starting on the last day of December and ending on the fifth trading day of January. This effect is owed to year-end selling to create tax losses, recognize capital gains, effect portfolio window dressing, or raise holiday cash. Because such selling depresses the stocks but has nothing to do with their fundamental worth, bargain hunters quickly buy in, causing the January rally. The Incredible January Effect by Robert Haugen in an authoritative text describing the January effect.


The strength of the effect varies depending on company size and other factors.

In the last couple of years, after the January effect became widely known to the public, it has become less pronounced and has started shifting to December causing a rise in stock prices, known as a Santa Claus rally and the December Effect.


refer to InvestorWords.com, the definition is
Tendency of the stock market to rise between December 31 and the end of the first week in January. The January Effect occurs because many investors choose to sell some of their stock right before the end of the year in order to claim a capital loss for tax purposes. Once the tax calendar rolls over to a new year on January 1st these same investors quickly reinvest their money in the market, causing stock prices to rise. Although the January Effect has been observed numerous times throughout history, it is difficult for investors to profit from it since the market as a whole expects it to happen and therefore adjusts its prices accordingly.


read article link below for more information about The January Effect.
The January Effect: Bull or BullShit?
by Mark Skousen, Chairman, Investment U

regards,
Boy YR