Premarket Monday Nov 3, 2014
Announcement of more buying of Japanese bonds by Japanese Govt. increased Stock Markets prices around the world in such a manner that we will spend some time here analyzing this data.
First under the asset purchase program, Japanese Govt. will buy at the annual rate of 80Trillion Yen instead of 70 Trillion yens. This is an increase of no more than 15 billion dollars per month. This is not a big deal.
Did devaluation of Japanese currency increase stock markets in Japan. It did in Japanese currency. What about in US dollars? The market has not even gone above 2007 Highs. See the Japanese ETF in US dollars below. Somebody should tell the Japanese Prime Minister that even if he were to devalue the Japanese yen to 200 Yen to US Dollar, it will have no effect on Japanese markets in terms of US dollars.
What about 4 Trillion dollars worth of bond buying done by our Central Bank. Has it reduced unemployment ? 92 Million Americans are still unemployed or under employed in the USA.
Has it increased our inflation rate to 2% over the last 6 years. Our annual inflation rate is near 1.4%
DJI & Nasdaq & QQQ made a new high on Friday. NYA and Russell 2000 did not make new highs. Similarly many iconic stocks like Google,
Twitter, Facebook, IBM , Coca cola , American Express, Intel, Priceline , General Electric, Walmart and Amazon did not make new highs and 380 out of 500 stocks in SPX 500 also did not make new highs.Only 11 of 30 DJI stocks made new highs. This divergence also tells us that this rally is the end of the 5th leg rather than start of something new.
Soon the rally which was manipulated for the mid term election will come to an end and there is no more stimulus left to engineer more gains in the US stock markets. US Markets will decline much more than up to this time .Same will happen in Euro zone markets.
DJI
NYA
SPY
QQQ
IWM
TNA Gave a Buy Signal on Oct 21
TZA Gave a Buy Signal on Oct 21
GLD Gave a Sell signal on 27Th Oct
UGLD 3 X long Gold
DGLD Buy on Oct 21 #X Bear Gold
GDX
DUST 3X Gold Miners Bear Gave a Buy Signal on Oct 21
Even though Oil has been going down Energy stocks have been going up
ERX going up
ERY
UGAZ Natural Gas gave a BUY signal two days ago
Announcement of more buying of Japanese bonds by Japanese Govt. increased Stock Markets prices around the world in such a manner that we will spend some time here analyzing this data.
First under the asset purchase program, Japanese Govt. will buy at the annual rate of 80Trillion Yen instead of 70 Trillion yens. This is an increase of no more than 15 billion dollars per month. This is not a big deal.
Second, Japan's Government Pension Investment Fund (GPIF) (which has 1.132 Trillion dollars) will increase its investments into international stock markets from 15% to 25% of allocation. This amounts to no more than 50 billion increase into US markets. It amounts to no more than 0.2% of the capitalization of NYSE and NASDAQ stock exchanges. It should have very minor effect on our stocks.(http://seekingalpha.com/article/2626935-japan-stimulus-not-my-cup-of-sake)
For the last two years, in spite of these investments, the deflation in Japan has not been stopped. See the chart below
US companies will get less earnings because of devaluation of Yen as well as Euro. If markets go up by devaluation of any currency , then we can keep on devaluing Yen and Euro day and night. Will then DJI go to 100,000?
Celebration by US markets and Eurozone markets because of devaluation of Japanese currency is a joke. This rally will not last long.
What about 4 Trillion dollars worth of bond buying done by our Central Bank. Has it reduced unemployment ? 92 Million Americans are still unemployed or under employed in the USA.
Has it increased our inflation rate to 2% over the last 6 years. Our annual inflation rate is near 1.4%
DJI & Nasdaq & QQQ made a new high on Friday. NYA and Russell 2000 did not make new highs. Similarly many iconic stocks like Google,
Twitter, Facebook, IBM , Coca cola , American Express, Intel, Priceline , General Electric, Walmart and Amazon did not make new highs and 380 out of 500 stocks in SPX 500 also did not make new highs.Only 11 of 30 DJI stocks made new highs. This divergence also tells us that this rally is the end of the 5th leg rather than start of something new.
Soon the rally which was manipulated for the mid term election will come to an end and there is no more stimulus left to engineer more gains in the US stock markets. US Markets will decline much more than up to this time .Same will happen in Euro zone markets.
DJI
SPY
IWM
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