Thursday, April 11, 2013

A look at Japan's Nikkei Stock Index short term and big picture

I've been actively following the Japanese Nikkei for 15 years now, let's take a look at the recent action as well as the long term big picture, I've attached 3 charts 2 daily charts and a 31 year chart.

The first chart below shows a daily chart of the Nikkei, notice that it has enjoyed a monster rally from the Oct lows of 2012.  However take a look at the Japanese YEN, currencey plotted above, notice that it's had about a 30% decline since that time!  So clearly that has benefited their stock index a lot, also Japan is printing an insane amount of money/liquidity into their economy (a much larger percentabe wise than our US Fed is printing with it's QE), so obviously that money has to go somewhere and it's went into their stock market

The second chart shows the ETF, EWJ.

The third chart shows a monthly chart of the Nikkei going back to 1981, as you know the Nikkei has been in a secular bear market since late 1989. It has enjoyed a nice rally since the 2009 lows and recently but it's still below the long term downtrend line.  This chart shows you the power of deflation! We'll continue to keep an eye an eye on this.

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