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Hi DIMITRIS,
Saturday, November 20, 2004, 5:36:00 AM, you wrote:
DT> How about the ^N225 open on Monday ? [technical or non technical
DT> opinions will be appreciated...] Dimitris
Has to be ugly, and I'm quickly losing my enthusiasm for the long
side of this market. Do you want a number? ^^_^^ Okay. The 225
will open at 10,988.13. It may close there as well. ^_^
I see the dollar @ 103.1 on this fine Saturday morning in the Big
Mikan. So, exporters are not going to be too happy about this.
What has kept the market alive this year (and contributed greatly to
it last year as well) is the so-called "domestic demand" stocks.
These are services (like banks), real estate companies, etc., that do
not (in theory anyway) rely on exchange rates or exports for their
earnings.
You can see what has happened, too, as investors have grabbed this
idea and run with it. Since the low in the spring of '03, major
banks are up several hundred percent (and institutions were pouring a
river of money into them yet this week, until Friday, when they
didn't show up). Real estate companies have tripled or quadrupled.
Electronics, semiconductors, etc., are lucky if they have doubled.
Some did double and almost triple on the initial surge last year, but
they have given a lot back. NEC, for example, ran from 350 to 1000,
but is now back below 600 and dead in the water at the moment.
But the "domestic demand" story only works (IMO) if the export sector
isn't acting as a genuine drag on the economy. It isn't right now,
but profits have surely peaked for this cycle, and there are a lot of
questions looking forward, as we can see from this morning's business
headlines.
I expect a lot of choppiness on Monday here, DT. We are at a
dollar/yen level that begs MOF intervention. However, there may not
be much here, as it was last year's interventions that have placed
such a strain on the Euro, forcing it to be the prime victim of
dollar weakness. Politically, that isn't going to play very well
this time around. Nonetheless, traders will be on guard for it, and
may not push the downside too hard, just in case.
There will be those who will try and defend 11,000. Clearly that
line is meaningless this year, however, it's been crossed more times
than a pilgrim visiting Vatican City. ^^_^^ The recent leg is not
in trouble technically (again IMO) until we get a close below 10,900
(this is near term, however, mid term that level will rise), just as
Friday's train wreck in the US does not change market dynamics yet.
It just bled off some hyperventilation, which certainly was in order
and needed to be vented.
I think it's safe to say here, however, that the powerful rally I was
hoping for is not materializing. Not yet, anyway. Most of the time
the smart thing to do is cautiously play at the margins anyway,
awaiting those rare periods when it pays (significantly pays, I might
add) to be rather reckless. I'd hoped we were nearing one of these
periods, but the signs have weakened considerably. Monday, I may
take the day off. I can't imagine a scenario on Monday that would
make me want to take a position either way. The fall colors are
beginning to cascade down the mountainsides all the way to the sea
now, and the parks in Tokyo are beginning to look like great places
to have a lunch date with my friends Mr. Chardonnay, Mr. Baguette,
and Ms. Frommage. (^_-)
Best,
Yuki
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