JAPAN’S NIKKEI SURGES ALMOST 4% OVERNIGHT
3 December 2009 by Cullen Roche
6 Comments
Stocks in Japan closed almost 4% higher overnight after the Yen decline, investors viewed the Fed comments positively, and gold hit a record. This confluence of events sent exporters soaring and miners higher. European shares are opening over 1% higher while Hong Kong closed over 1% higher. Expect the dollar down stocks up trade to continue tomorrow….This is almost getting too predictable….
I saw many newspapers report that stocks i Japan viewed the Fed comments positively however I doubt this had such a big impact on the gain.
I also doubt that we will see a year-end rally if not any mysterious buyer will appear. However we could go sideways? I think there are to many questions that don’t predict a rally.
1. Many are expecting a rally but will anyone keep on buying? Will they keep up this buying even though more statistics will be worse than the forecasts?
2. Will they ignore worries about 2010? Like the FED’s statement pointed out,
and if I use TPC’s words “created a false sense of retail sales optimism” because of government stimulus.
3. Could it become a psychological effect? Have we already reached the top?
http://pragcap.com/pessimistic-sentiment-reaches-new-lows-could-be-foreshadowing-a-top
4. Insiders are still selling off more than they are buying.
http://pragcap.com/insider-selling-remains-abnormally-high-buying-still-non-existent
Yen weak stocks up. Yen strong stocks down. So what’s new. The NIKKEI was down 10% on Yen strength. Is there any surprise that it would bounce back on a sharp weakening in the Yen.
Most interestingly, I just heard on CNBC that JPM was a big seller of the S&P500 as 1,115 yesterday. The didn’t even get their entire order off before the market dropped. Is 1,115 the new 1,110? (Half a percent makes that much difference?)
It seems that 1,120 is a critical level. Either the shorts come in and get blow out for the next leg higher or the 50% retracement really marks the top for now as year-end profit taking takes hold in place of a year-end mega rally.
FX Concepts CEO said a couple of weeks ago that he expected the dollar/euro to bottom at 1.525 and the S&P500 to top at 1,120. Dubai got in the way of his prediction. Looks like we might get there today or tomorrow.
1120 seems too predictable. Everyone’s watching the same level so that tells me it probably won’t end there. We’re so close to it today. JPM selling at 1115? That’s interesting. Weren’t they the ones who came out last week or 10 days ago with a projection of 1160 by year end?
GS came out just before the 666 bottom in March and predicted that the a drop to 650. The banks get everyone selling just before the bottom and buying just before the top. All bank stocks became a sell in February and then a buy after most had doubled off the lows.
I agree that 1,120 is too predictable. That is one reason why I thought that mass selling at 1,115 was interesting.
The service ISM just brought the market back down to earth. The Bernanke debate may take that market down further today.
I may be wrong, but if the market reaches a real top the decline which follows will be slow. The market will drift down. For now the more likely scenario is another swift sharp correction followed by a rebound. Based on the pattern of most of this rally, the market would correct 4-6% before a leg higher. The predictable pattern would be 1,120->1,075->1,150. Maybe too predictable.
1120 is just a number. This market will blast thru that.
Maybe by tomorrow. If 1120′s is breached all bears may capitulate and we may see 1150-1225 likely. Just like when 875, 956 broke the market went higher. If we continue to see bad data the dollar may slip down the slippery slope with investors hopping on the equity train for safety.