Stock Market Analysis

Sunday, January 22, 2012

Happy Chinese New Year!!!

It is Chinese New Year today, signifying the beginning of the Chinese year of the Dragon. Here's wishing all of my Chinese readers all over the world a very happy and prosperous Year of the Dragon! Gong Hei Fatt Choy!

Unlike western mythology, dragons are not symbols of evil in Chinese culture but rather symbols of good fortune and prosperity. So, is the year of the dragon going to usher in a prosperous bull market? Well, at least so far, 2012 is shaping up to be quite encouraging. The overall recovery pattern that started back in 2009's bottom pivot is completed with a successful intermediate retreat and continuation in 2011. There is no doubt now that the market is in recovery mode even though if you only realized it now, you would have missed a bunch of profit already.

The January Effect, also known as Capricorn Effect, seems to be back in the market this year as the Dow gains a nice 2.4% last week as economic data continues to be largely better than expected. The Dow has gained a total of 4.1% this month so far and it is now up against the 12,800 points resistance level. This was the very level which resulted in the nice double top formation leading to last July's intermediate correction. With the Dow in short term and mid term overbought condition, I would expect some struggle around this area before a committed breakout and continuation of the bull market. In fact, the Dow could retest its 30MA before mustering enough energy for a real breakout.

Overall, I am bullish on the year of the Dragon and will certainly be re-opening my managed account service so that I can help more people make more money this year! Those of you who wish to be on the priority queue for this service, please email me at . Let's make the year of the Dragon the most prosperous one ever!


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