Do you have a good Nikkei daily chart that covers the period from the 1990 high down to the 1992 low? I've seen the dailies that you posted before, but they only run out to September. The similarities are uncanny. Today looks *exactly* like the first trading day of October, 1990. Nine months off the top, nearly 50% off the top, following a dismal week in which stocks lost over 15%. We are nine months off the top, nearly 50% off the top, and we just finished a dismal week with double-digit percentage losses. They gained 13% in that one day of short-covering; we gained over 10%.
It appears that the first day of that rally netted the majority of the gain for the next six months; it bounced from 20,000 intraday to 23,000, and the next six months it worked its way back to the lows seen in the first leg - roughly 27,000. The overhead resistance was too much, and then the next fifteen months were a steady bleed. So you probably want to fade the first attempt to crack 3000, and if it tests the May lows from beneath, it's time to start loading up the cart with poots. However, the message would be, as you say, buy the dips for a while. Believe in Santa. Just don't go clownish over it, because while history may rhyme, IT'S DIFFERENT EVERY TIME. Our bubble could actually be the worst in history - only time will tell.
Have you ever seen any sentiment surveys from the Nikkei crash? I'm intensely curious as to the sentiment patterns that produced the price activity. My sneaking suspicion is that they also had pervasive bullishness all the way through 1990 - and it wasn't until later in 1991 that the masses gradually turned bearish amid deteriorating economic conditions that the mutual fund outflows hit full stride, and the market bled to death for 15 months.
I'm also curious regarding their Fed activities. I believe that the Japanese CB began easing roughly one year after the top - and Easy Al is on track to repeat the exact same pattern. Do you have a chart showing Nikkei vs. their interest rates?
BC |
