I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Wednesday, November 25, 2009

Another Look at a Few Asian Markets

I have written several posts in the past looking at Asian stock indices (Long Term Count of NIKKEI, HSI Long Term P/E Analysis, A Look At Some of the Asian Markets, and several others).

And it is worth re-examining as the Asian markets have led the world stock rally. They were the most oversold and hence were the earliest receivers of speculative money. It is a reasonable hypothesis that money will leave them first as well. This is a point I have made several times in the past, and have had conversations with other bloggers (such as Alphahorn) along these lines.

So some of the "hot" markets that aren't looking so hot right now are the SSEC, KOSPI and HSI. The HSI is definitely holding up better, but the SSEC and KOSPI have both retested major resistance levels and both have been "rebuffed".

Next is the old NIKKEI. Ouch. The long term chart tells the story of this Blue Supergiant, which burned so hot and so bright for decades, and is continuing to implode after fusing all that hydrogen into helium.

It has been leading down recently. And I think a lot of this has to do with the "carry trade" baton being handed from the Yen to the Dollar. So a fair question is, what happens to US markets when the carry trade gets handed off to somebody else? (Treasury Bond rates are a balloon being held underwater, but I certainly don't argue that rising rates will make the Dollar healthier. Far from it. Just more expensive. Riddle: Is a more expensive worthless dollar still worthless?")

I digress, here are the charts.

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