Yearly Trend line bounce | Open above short term fib (17,317)

2014年12月18日

Here are the things that drove the market down.

Japanese Election 14 Dec
Fed Interest Announcement
Technical indicating markets being overbought
As you can see, the technical are above the below the danger zone of overbought and have just passed the danger zone of oversold (Shorter Term charts like 4 Hours)

Why I believe the market rallying from now (Technical Analysis)
According to the chart, we have first bounced of the yearly trend line (Green arrow) As you can see the trend was breached in October, resulting in another drop of around 700 points, which is why it is such a strong trend.
Secondly we have opened above the short term fib (17,317)
As you can see the trend was breached in October, resulting in another drop of around 700 points, which is why it is such a strong trend.

Why I believe the market rallying from now (Fundamental Analysis)

Japanese Election (14th Dec)
The general election on December 14th cost ¥63 billion (over 500m), and came just two years after the previous one indicating the importance of the event. Abe Japan Ruling Coalition wins majority votes. The 60-year-old premier called the early election to gain a mandate for his economic policies to end deflation, known as Abenomics, after the world’s third-biggest economy slipped into recession. As Deflation is coming to an end, we can expect the yen to rise in value along with other international markets such as the USP500 and UKFTSE100

Federal Reserve Interest Rate announcement
Fed Chair Janet Yellen clarified the central bank’s monetary policy plans, saying it is likely to hold rates near zero at least through the first quarter. As interest rates are held, investors can be confident on their securities till at least around the first quarter of 2015. Along with this announcement, on Saturday evening the Senate mentioned passing a 1.1T spending measure indicating inflating the countries overall cash flow which is good for businesses.

OPEC (Organization of the Petroleum Exporting Countries)
Has announced that it will NOT stop production anytime soon. Allowing the world to benefit from cheaper oil prices. BUT you need to be careful and have your own analysis ready as I wont do this part for you. Critically thinking, US30 has quite a few who rely on rising oil prices so there value will drop, dragging its local index down. However there are companies who will benefit from falling oil companies globally which are in majority compared to Oil dependent companies like Chevron and EXon Mobil. Companies benefiting are the likes of Airlines and Industrial types.

I have my profits set at 1.618 Fib (Red Arrow) and got in at the trend line with a very small risk (First Green arrow)
I recommend tightening your stops as you make your profits.

MERRY CHRISTMAS AND HAPPY NEW YEAR!