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A good pattern over two years,, we may test the 200 days mA but the over all bond package where they have finally decided to issue 600 bn $'s bonds and encourage the banks to lend is big sea change of attitude. If, I look at the charts alone it appears that this may be one of those two earlier attempts where markets failed to remain above this two 200-days MA. However, if I try to insert the emerging fundamental facts in the equation and than try to read the chart, I feel that new consolidation of Nikkei at higher levels above 200 days MA is in progress.
This third attempt to break thru 200 days MA. It loks like to move higher, a one year out position like selling 13000 puts and 18000 calls on JPN may be a good play if we see this consolidation continues above the 200 days MA for another ten to fifteen sessions.
Ofcourse, we need to see the next Tankan survey but I think we have seen the worst and Japanese have decided to reflate the economy by introducing a little inflation and let the people feel that they can no more wait for next year to buy, as prices may be higher, one of the major reason Japan has this deflationary mentality is that people know that spending money or buying products would be cheaper next year, even zero returns on savings does not encourage them to buy as prices keep falling, now with monetisation of debt and money being available and with some infaltion we will see asset prices stablising albe it with some lag time as people understand the complex phenomenon being unravelled. This is a huge shift of approach.
Igniting local demand by introducing soft inflation is a policy whose ardent advocate has been Prof Krugman, this will lead to weakening Yen ultimately and we may see some pressure on ASEAN markets specially China, as Yuan rumblings will start with Yen weakening but probably we will not see 155 or anywhere near that as huge leveraged funds are out of equation. I know my dear bears every morning or late nights wait to see those huge falls in ASEA, and like to see limit down opening in US but the old good times are not just their where out of blown ASEAN contagion was hurting the US markets dis-proportionately. The limit down openings are long gone, here we find a divergence and absolute normalcy in Global markets once hedge funds got that hugre bloe in ASEA where they were eliminated in that double play, the HK monetary authority used their own medicine to destroy them, although Idea supported the action respected journals like WSJ and FT were 'crying wolve' that Hong Kong Moetary authrity by interveening in free markets have shoot themselves in their foot, the fact remains that sometime Central Banks in the age of mass movement of capital have to be as smart and able to use the smae techniques as hedge funds.
We will will be concentrating on a managed slide instead of a free fall in absence of huge leveraged palys... So interesting times in ASEA. Stocks like SNE Soft banks and Tokyo Mitsibushi Bank Olympus will benfit.. |
