Wednesday, 10 November 2010
The spell of Nasdaq following Nikkei broken
In March 2000 a sorceress(Meg Whitney ? to become over 121 months governor of California?) casted a spell over the Nasdaq causing the dot.com bubble to burst after Nasdaq's mojo seemed to be sold on ebay: Nasdaq thou shall follow the path of the Nikkei with a leg of 121 months.
And thus it came to pass. Until the powerful magician Bernanke at the end of August on the Jackson Hole conference broke the spell. With enough hundreds of billions of dollars, maybe trillions it seems to happen: the market has its greed back. The correlation Nasdaq / Nikkei is broken. Howard Simons van Bianco Research saw it (see chart). He wants 2.8% higher prices to be definitive, but you can already see that is stockmarket no longer is following the Japan scenario.
N.B.1 Japan started with QE1 in March 2001.
N.B.2: When Bernake proves to be not such a good magician and the equity markets starts again to follow the Nasdaq / Nikkei scenario (=double dip arriving), the equity markets wil go down tremendously.