The market will be down in response to Japan....The news out of Japan is not good....The market will be down....I plan on selling EGGS at the open and locking in my profits. I think EGGS may come down hard immediately after the gap up on the open....Their will be a lot of profit taking compounded by the news out of Japan...and then at the top of the gap the shorts will pile on...I still think EGGS has some legs left...but not tomorrow.
Here's a story on Japan:
TOKYO, July 13 (Reuters) - Tokyo stocks and the yen were expected to take a battering on Monday after Japan's ruling Liberal Democratic Party suffered a huge setback in an election widely viewed as a referendum on the government's ability to pull the country out of recession.
In early Asian trading, the yen had already lost nearly two yen against the dollar from Friday's New York close, to trade at around 143 yen to the U.S. currency. Traders forecast a test of 145 yen later.
The LDP's disastrous showing, which almost certainly forebodes the end of Prime Minister Ryutaro Hashimoto's administration, throws into doubt prospects for a series of economic policy measures, including a scheme to help banks work at least 77 trillion yen ($538 billion) in problem loans off their books and permanent tax cuts.
Currency traders in Tokyo predicted the yen would take further blows as Tokyo trading gets underway on Monday, as the ruling party's stunning election setback is expected to stall policy momentum, exacerbating Japan's economic downturn.
They said the focus was now on how quickly the LDP can come up with a replacement for Hashimoto and his cabinet.
Japanese government bond yields, which sank to historic lows earlier in the year amid economic gloom, were expected to fall again amid concerns about policy paralysis.
While the LDP has vowed to push the packages forward despite its failure at the polls, analysts and traders say the policies are now in jeopardy, suggesting no end for Japan's economic woes.
''This puts everything into question,'' said Yasuo Ueki, general manager at Nikko Securities. ''Stocks are going to fall hard.''
The LDP won only 44 seats in the Upper House, far less than 61 it had hoped for. The failure comes after progress on the policy initiatives sparked a bout of equity optimism that pushed the benchmark Nikkei 225 average up 5.1 percent over the last two weeks.
On Friday the Nikkei closed at 16,090.06.
Hashimoto's party, which stumped hard in the run-up to the election, was dogged by a series of miscues by the prime minister just before the poll.
Although the Upper House is primarily a rubber-stamp organ, the party's drubbing at the polls underscores widespread lack of confidence in Hashimoto's administration.
Progress on two main policy initiatives has dominated financial market activity over the past few weeks. A scheme to set up ''bridge banks,'' which would lend to relatively sound borrowers of failed banks, is seen as crucial to alleviating a credit crunch that has helped exacerbate a record spate of bankruptices.
Permanent tax cuts, which have been called for by domestic critics and overseas allies, are seen as necessary to reignite consumer spending, which slumped after the administration raised the nationwide sales tax to five percent from three percent in April 1997.
Fixed-income traders say the LDP's savaging at the polls means more money will flow into the relative safety of their market as the election results play themselves out.
''It's going to take a while for everything to settle down and in the interim the economy is going to worsen,'' said Jun Fukashiro, senior fund manager at NCB Investment Management. ''Bonds are the only place to be.''
The yield on the benchmark 182nd government bond was last traded at 1.37 percent. The bond has about seven-and-half years left until maturity.
($1 equals 143 yen) |
