Nikkei 225

Japan recently intervened in the currency market. The Yen , like the Swiss franc is so high that industry is getting killed. For at least two years now I have presented a scenario for the Nikkei 225 that is particularly dreadful. One would hope it never comes to this but this is simple an interpretation. Here are updated charts;

Nikkei 225 aug 6 2011 arith. 

There are at least 15 other entries, so feel free to look at them. The above chart is arithmetic , it calls for a low below zero and that may be possible for deposits at Mellon bank in New York, but not for equities, not even in Japan. So we will use the semi-log chart;

Nikkei 225 aug 6 semi-log 2011

Problem solved, we will not go to negative values , but we may go to, say 3000 or below. This is a standard “expanding diagonal” pattern. If correct , it does not bode well for Japan. But, on the optimistic side , if you care to put it in such terms, after the low is in it will have a violent upswing. As always, time will tell.

There are alternative counts, but few that are as credible as this one, and as incredible as it may sound, once upon a time, just 21 years ago, the Emperor’s  Tokyo palace  grounds were supposedly worth more than the state of California. In these times, anything is possible.