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I have a 401k and don’t own Japanese stocks nor the Nikkei, why in the heck should I care if Japan has a problem or not?
I believe it can pay to be aware of what the hottest performing stock market in the world is doing. Over the past 12 months, the Nikkei is up DOUBLE the S&P 500. Ok, so the Nikkei has done well, why be concerned or how could it impact my 401k S&P 500 holdings?
The Nikkei has suffered two large declines of 50% or more since 2000. The declines took place in 2000 & 2007, the same time windows the S&P 500 did the same thing. The Nikkei declines started before the S&P 500’s declines.
Now the Nikkei is up against this long-term resistance line and looks to be breaking support. NO trend reversal in the Nikkei is proven at this time. As you can see short-term steep support is being taken out at (1) in the chart above.
If you are long the S&P 500, Nasdaq 100, Russell 2000 or stocks in general, do keep a close eye on what happens to the Nikkei in the future, it could well impact stock market values in the states. It has paid to use the Nikkei as helpful took when constructing portfolios in the past, I doubt this tool has lost its luster at this time.
No trend proven…do stay tuned though!!!