Short term Technical Outlook of Dow

Dow has been in a medium term rally since it tested 9600 on july this year. Recently, it made a year high at 11615. After testing its high it has been trading just below that level for the past two trading sessions. From here on the level 11300 seems to be crucial. As long as it trades above 11300, it is likely to test 11900 in coming weeks.

On contrary , if breaks 11300 and trades below that level, then it is likely to decline towards 10900 in coming weeks. Futures traders can hold their longs with a stop at 1130. And fresh Shorts can be initiated when Dow rallies towards this level.

The long term trend continues to be bearish. Dow is likely to make major top in the middle of 2011. Until then, one can hold their investments.

Short term Outlook of Jakarta Stock Exchange Index JKSE

For the past three months, JKSE is taking support at 3520 levels and it is likely to act as a trend decider for the coming trading sessions.  In the upper side it was resisted from 3800 region for two times.  Currently it is trading 3600 and it is very close to the short term support level of 3520.

If the index breaks 3660 in the short term it is likely to remain bullish and in the upper side it would try to test 3800 levels once again. On contrary, if it fails to move past 3660, then it could all set to test 3520 again.

Right now, the trading strategy should be based on the level 3660. Traders have a eye on that level to initiate short or long positions.

In the long term charts, the index has moved past its 2008 high of 2850, and made an all time high at 3800. Technical analysis of the index shows it is going to top out in this year 2011.

Behavior of World Indices in 2010

The year 2008 saw a big correction in stock markets world over and it was followed by a rally from 2008. Many Indices rallied and gave one of the biggest appreciation in 2009. The year 2010 can be considered as not bad.


The European Indices rallied in 2010 but the magnitude is less when compared to the Asian Markets. Many Indices in Asia moved past their 2008 highs. Srilankan Stock indices moved passed their 2008 high. Indian Market came very closer to their high, but so far it has not crossed that levels.

But the notable performance is from China’s SSEC. When compared to their other Asian counterparts, the chinese index has so far under performed. If the stock market continues to under perform in coming months, I doubt whether they could maintain their present growth rate.


Since Stock Market prices reflect the future perception of the Market, continuous underperformance foretell a big correction in China’s Stock Markets. If the fastest growing economy in the world, china, doesn’t see their indices move up, it cannot sustain its growth.


In US, the markets rallied, but is has not rallied as much the Asian markets moved.

Is Insurance needed ?

          Insurance is needed to face unwanted death or unexpected accident in one’s life. Insurance is ensuring your family’s good life after your death or ensuring a good life for you after an unwanted and unexpected incident in your life. If you have a motor vehicle, you need to insure it for the same purpose.

Types of Insurance

Life Insurance
This insurance is to cover your life. You can have a term insurance or a endowment policy.
In term insurance, you will get coverage but you will not get any money back. But the amount paid here is very meager.
In endowment policy, you will get coverage and also some many back in a future date. But the premium here is more than the term insurance premium.


Accident Policy
In this policy, in case of any accident, the amount insure will be given. Otherwise, you wont get any return.

Vehicle insurance
In this insurance, the cost of repairing the damage or theft, the life of the driver and the life of the third party who is injured by the vehicle will be covered. In case, if none of the above it claimed, you will not get a return.

Mediclaim
This policy is to cover all your medical expenses.

A person should take all these policies to secure his family from any unexpected events. In particular, the breadwinner of a family should compulsorily have these insurances.

Risk involving in Foreign investment

Foreign direct investment plays a vital role in the international business. It provides a new market and marketing facilities, production facilities in lesser cost, access to latest technology, new products. Foreign direct investment simply means a firm from one country making raw physical investment to build a factory (direct investment is the investment in buildings and equipments not in portfolio investment) in another country.

                In FDI there are so many risks ply with let us analyze one by one the first and foremost one is the country risk. All business dealings involve risk. When the business cross the national boundary then it faces additional risk beyond our control let us analyze one by one. These risks are of national differences in economic conditions, policies, socio political situations and the currency values. You may categorize them in to following six main headings.

                Economic Risk

               

                Transfer Risk

               

                Exchange Risk

               

                Location Risk

                Sovereign Risk

                and

               

                Political Risk.

               

                Economic Risk is the significant change in the economic conditions that can produce major change in the expected return of a foreign investment.

                Transfer risk simply means the risk arising from the decision of the foreign government to restrict capital flow. As the governments have the liberty to revise their policy at any time the transfer risk is also high.

                Exchange risk is an unexpected change in the exchange rate. As the currency hedging mechanisms is impractical over a long period, the exchange risk can be developed.

                Location risk is the risk which includes spillover effects caused by the problems of the particular region or the problems in the partner country.

                Sovereign risk procedures of a government’s capability to pay are similar to transfer risk measures. Sovereign risk has close association with transfer risk.

                Political Risk concerns risk of change in political climate, change in government, and change in society or any other non economic factor.

                 Hence every foreign company examines various methods to measure the risk of investing in a foreign country and the lay a strategy to minimize the risk.

                                                                                                                                          (to be continued)