Japanese ¥ to Nikkei Dow
Posted by jdavis on February 26, 2014
The above is the three year chart of the Japanese ¥ price compared to the Nikkei Dow share index.
As you see the ratio fell dramatically from the end of 2012 to the middle of last year, with a final lurch down at the end of the year.
The bottom panels suggest strength is coming back to the ¥ vis-a-vis the Nikkei. If it does, then that suggest that in 2014 the ¥ will strengthen and the Nikkei will fall.
The Nikkei stood at c 40,000 in 1989 - at the height of Japan's bubble. As of October 2012, it was c 8,000...!
Now it is c 15,000. The above suggests it may come down below 12, or 11 or even 10,000 again. If it does, we will be buying with both hands.
We will also do something about the long term collapsing currency (potentially taking a breather just now). Otherwise, we may win on the shares and lose on the currency. That wouldn't be much good would it?