Excerpt from: “Crystal Ball for Investing and Trading” Book.
Status of Japanese NIKKEI-225 Index
NIKKEI-225 represents the Japanese stock market Index. It comprises 225 highest capitalization companies trading on the floor of Tokyo Stock Exchange.
Although the world major stock indexes nearly all made a new all-time high in 2000, Nikkei-225 made it already in November 1989. Figure 13.13A shows a monthly chart of Nikkei-225 from 1965 to March 20, 2020.
Figure 13.13A – Chart courtesy of TC2000.com
The following points are worth highlighting:
- From 1984 to November 1989 the Nikkei-225 went from the price of some 10,000 up to the all-time high of over 40,000. This top occurred some ten years before the top of other major world Indexes.
- The Nikkei-225 correction took a pattern of zigzag with the subwave A top in November 1989 at 40,000, and its bottom in March 2009 with a price of around 7,200. Subwave B then brought Nikkei-225 up to 24,000 in February 2018. Finally, the sub-wave C, also a zigzag, should bring it down through the support line of 2009 or some 7,200 in November.
- In March 2009, the 7,200 bottom represented a loss of over 80% from its top.
- In 2007, it went up to a bit more than 18,000 but failed to go beyond the top of March 2000.
- In 2009, it made a new low just above 7,000 and remained in a side-way channel until Q3, 2012. Therefore, Nikkei profited only slightly from the major Japanese, US, Eurozone, the UK, and Chinese QE programs.
- In Q3, 2013, Mr. Abe, the Prime Minister of Japan, initiated the Abenomics, a massive QE program to devalue the yen against other currencies. The program led the Nikkei-225 to go up to approximately 21,000 in July 2015.
Japan is currently running a massive Quality and Quantitative Easing (QQE) policy where the government injects some one trillion dollars in the economy each year.
For further details regarding the state of Japan Economy and Finances, please refer to the section “Bank of Japan.”
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