|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Has the Japanese Stock Market Peaked Yet?
Posted by: inthemoneystock (IP Logged)
Date: February 27, 2013 06:28PM
One of the hottest stock markets in the world has been the Japanese stock market. The highly followed Nikkei 225 Index has rallied higher by 3200 points since mid-October. Anytime an index surges higher by more than 35 percent in such a short span of time it does make traders and investors wonder how much further this index can trade before pulling back or staging a meaningful correction.
Traders and investors should now expect a pullback and possibly a correction to take place in the highly followed Japanese stock market. Recently, Japan's Finance Minister Taro Aso stated that he wanted to get the Nikkei 225 Index to reach 13,000 by the end of March. Devaluing the Japanese Yen (Japan's currency) is the tactic that the Japanese government and Bank of Japan (central bank) are using to inflate their stock market. While it has been working it does not come without repercussions. Anytime any country devalues their currency it will ultimately lead to inflation. As many of you know, Japan has been fighting deflation for nearly 20 years now, so I guess they are thinking that they need to really inflate their markets.
As a technical trader we know that markets can only travel so far before pulling back. It does not matter how much money printing and inflationary tactics are taking place. At certain technical points markets will pullback or consolidate before moving higher. You see, institutions that are long the Nikkei 225 Index will simply want to lock in some gains and this will cause the markets to pullback regardless of any government effort to prop up the market.
It looks as if the Nikkei 225 Index has now reached a level where a pullback or possibly a correction should occur. The Nikkei should have a near-term daily chart support around the 10,500 level. This is a level where the Nikkei 225 index could see a decent bounce according to the charts. Another way to play the Japanese market is to use the iShares MSCI Japan Index Fund (ARCA:EWJ). Some leading Japanese ADR's that trade in the United States could also be affected. Leading Japanese stocks such as Sony Corporation (ADR) (SNE), Panasonic Corporation (ADR) (PC), Toyota Motor Corporation (ADR) (TM), and Canon Inc. (ADR) (CAJ) could pullback if the Nikkei 225 Index declines.
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.