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The Tokyo Nikkei Average rose +82% in just six months in a parabolic move that was
doomed from the start. They almost always are. When a parabolic move breaks, as it did in May, the speed of the decline can be catastrophic and has fallen 22% to date. The downside expectation is for prices to return to the level of the basing pattern that preceded it. In this case between 8300 to 9100. That is not a prediction, just the level we at which we might expect to start looking for a tradable bottom.
So writes Carl Swenlin (www.decisionpoint.com) in edited excerpts from his original article* entitled A Long-Term Look at the Nikkei.
[The following article is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Swenlin goes on to say in further edited excerpts:
Before we get to the long-term chart, let’s look at the one-year daily bar chart.
As dramatic as the above chart is, it is hard to beat the long-term chart below for drama, when we look at the parabolic rise from 1970 to the all-time high in 1989. Over the last decade prices seem to have found a base at around 7000, instead of 5000, where the pre-parabolic base was. For this we can thank the super-human efforts of the government to avoid the inevitable by printing money. After over 20 years of avoidance, their economy has still not recovered, and recovery is nowhere in sight.
Conclusion:
Long-term charts put things into perspective, and the recent, exciting six-month rally is shown to be a mere blip in a long, grinding trading range. Also, the possible downside is at least 7000, or maybe 5000.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
* http://pragcap.com/a-long-term-look-at-the-nikkei (© Copyright 2013 — PRAGMATIC CAPITALISM. All Rights Reserved)
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If you don’t think that PM’s are now being manipulated by the Central Banks, then I think that you should not be investing in buying additional PM’s!
BUT
If you believe that the Central Banks cannot continue to keep printing paper money forever then what is happening now is nothing but a huge buying opportunity!
Consider: As the Central Banks further restrict credit and loans to us, what other options besides selling PM’s (at a large discount )do small investors have, if they want to grow what is left of their portfolios? This is a move to drive a stake into the hearts of all those that are still holding PM’s; while at the very same time, these same Central Banks (who are in on the deal) are scooping PM’s up (using their own printed paper money) at very low prices.
My gut feeling is that when the PM “reversal” happens, it will be so extreme that most small investors will not be able to jump on-board before the prices have skyrocketed relative to where they are currently, due to the market dynamics that favor the really big investors.
Here is a great PM question for you, Are the Central Banks still buying Gold, and if so why?
I look forward to your comments!