Today JKSE plunged to 3369.14 pts, which has been discounted by 19.7% from the highest point in this year, 4195.72 pts. Yet, it plunged with a very phenomenal number in Chinese tradition which is -8.88% but with a minus which is not good of course. But, let's see in more detail of what is happening.
From my perspective, I see that the index plunged is due to the high selling pressure and also the panic selling of investors, which is also triggered by the bad economy outlook in US & EU, which is no good at all. The second trigger is the downgrade of Italy as one of the largest economy in EU. The third is the slowing economy of China & Japan.
What is happening in Indonesia? Indonesia still has its inflation under control which is under 5% Aug YTD, the BI Rate is still favorable for investors at 6.75%. But there's one thing that's not favorable which is the valuation of our stock, which is too high. So, in order to get a cheaper price the dip is expected not only by the big player, but also by all traders.
I will show you the analysis using Elliot Wave & Fibonacci Retracement. I start the analysis using monthly chart from mid 2002 up to present. In the Wave theory we know there are 8 waves which are 1-2-3-4-5-A-B-C. Since I start the analysis in 2002, then from mid 2002-end of 2007 will be the Wave 1. Jan-Oct 2008 would be the wave 2, the next wave will be from Oct 2008-Aug 2011. The next wave is Wave 4, which is usually equal to the length of wave 2. How can I say that this might be the wave 4??? This is confirmed by the Fibonacci retracement number.
In Fibonacci retracement, there are some numbers that we must remember, which are 23.6%, 38.2% , 61.8%. These figures are very important especially in identifying the possibility of extension in the wave. In the wave theory usually there's a major wave (1-3-5) that extended or contracted by those figures. Here's the calculation for JKSE from the chart below.
I started counting the wave from the dip in 2002 which was the dot-com bubble time that drag down most tech stocks. So, we can see the chart since 2002 up to now. How can I say the wave 4 seems to be coming????
Wave 1 = 2838.38 - 323.32 = 2515.06
Wave 2 = 2838.38 - 1089.34 = 1749.04
Wave 3 ==> 3 possibilities:
- Extended by 23.6% = 3108.61 => JKSE Wave 3 target = 3108.61 + 1089.34 = 4197.95
- Extended by 38.2% = 3475.81 => JKSE Wave 3 target = 3475.8 + 1089.34 = 4565.15
- Extended by 61.8% = 4069.37 => JKSE Wave 3 target = 4069.37 + 1089.34 = 5158.71
The nearest with the all time high of JKSE is the 23.6% extension. JKSE all time high was 4195.72, this increase my belief that our index might really plunge by now. But when it might stop??? No one knows. What we can do is only to get ready for the worst.
Wave 4 Target might be the strong support of 2010 to the wave calculation, which is around 2446.68-2502.05. Hopefully this don't happen, but there nothing to lose for just getting ready for the worst happening.
Have a great night.....^^
Happy Investing^^
Disclaimer ON!!!
Happy Investing^^
Disclaimer ON!!!
