Nikkei 225: 06/06/2017


The chart above presents my phasing analysis on the Nikkei 225 stock market index. The Japanese market has been in a stagnant state for over 27 years now. Many people have lost hope in the Japanese economy and that is typical at a bear market troughs. This bear market has certainly turned the most optimistic into the gloomiest bear. I remember when Jim Rogers was asked about Gold he said “I am not buying yet, there are some people that are Gold bugs and think Gold is holy and it should not go down. When they give up I hope I am smart enough to buy some”. I can state with absolute certainty that even the patriotic Japanese have lost hope in their market which is certainly indicative of a significant bear market low. No bear market lasts forever and this lasted and is still going on from a cyclical perspective for 27 years now, there is not much lower this market can go in my humble opinion. From a cyclical perspective we seem to be in the final 9 year wave and some would argue the final 54 month wave prior to a 162 year cycle trough in this stock index. A bear market of such magnitude is certainly that of the 162 year cycle duration rather than a simple Kondratieff cycle correction. It is customary for 324 year cycle corrections to last 60 years and the 162 year cycle should not last longer than half that much. It is important to note however that this market is on the verge of a major advance to the upside at the time of writing contrary to our outlook on the DJIA and German DAX. The reason for such an outlook is currency complications in Japan considering that the JPY is bearish against every major currency out there. Let us now take a look at the projection we have on this particular market.


The projection on the Japanese equity market certainly seems pleasant to the eye. I am of the camp, if there is any, that believe that the all time high on the Nikkei will be tested at or before May of 2019 when this market is projected to peak. The upcoming 18 month cycle trough in terms of the Nikkei and the other indices should send the Nikkei taking off in a parabolic advance (JPY pairs everyone!) that is likely to last for three years into the future. The 162 year cycle trough in this market is expected in October of 2021 which is somewhat later than the troughs we are expecting in terms of the US and European indices. Many call me an outright bear but here I am projecting a parabolic rise in the Japanese equity market. Some critics may say “Ahmed is just hedging his risk being bullish and bearish at the same time”. I would have loved for the Nikkei to be bearish as well to confirm my outlook on the US and European bourses but unfortunately it is not and I call it how I see it. If both calls turn out to be accurate then that should be a testament of skill considering the current positive correlation between all equity markets. Another reason to believe such a divergence will occur is the outlook we have on the JPY pairs. The Japanese equity market is more correlated to the XXX/JPY pairs rather than the other bourses and the positive correlation between them is only a recent phenomena (2003-now) which gives me confidence in making such a bold call on this particular index.


Another reason to believe that such an advance will materialize is the FLD of the 18 year wave. We recently took out the 18 year FLD and we have yet to achieve its target. Notice the cycle trough on the FLD matches perfectly with the anticipated cycle top of the current 9 year wave. This is indicative that the time cluster specified by the projection line is likely to be accurate and such an advance is most likely going to materialize in the following three years.

In conclusion, the Nikkei is one of the very few indices that are presenting potential gains from here on to 2020. I am of the preference of longing the JPY pairs rather than longing the Japanese equity market unless one is in Japan and is trying to preserve his/her capital in the upcoming hyper inflationary environment.



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