Monday, September 30, 2013
Japan is Back!
On Wednesday, September 25, 2013, Japanese Prime Minister Shinzo Abe, known for the unprecedented buying of Japanese government bonds by the Bank of Japan (BOJ), rang the closing bell of the New York Stock Exchange (NYSE), with a banner behind him that read "JAPAN is BACK. Invest in JAPAN. This comes after a historic rally in the Nikkei 225 stock index since the October 28, 2008 low of 6,994.90. One didn't see this type of sentiment in association with the low in the Nikkei 225 in October 2008. It was a time of fear and panic. Now everybody knows why the BOJ will be able to hold up the Japanese Economy. This is how markets work. They give everybody all the right reasons to do the wrong thing at each major turn. In my view, this appearance by Japanese Prime Minister Abe is a perfect contrary indicator, and exactly what one should expect to see at the top of a bear market rally. The index topped in its counter-trend rally on May 23, 2013 and this appearance of the Japanese Prime Minister with his optimistic outlook is associated with a lower high in the index, as is the entire rally itself off of the October 2008 low. The Nikkei 225 should continue on to move well below the October 2008 low in its now 24-year bear market.