Nikkei Tagged First Pullback Target
By LawrenceZoom in to hourly on Nikkei in this chart.
This is an update to my post Why Nikkei 16000 Has Always Been The Target?
Now that we got the first pullback. We have to ask ourselves – is it done yet?
It is similar to the Apple chart I posted before, once you see a 20% flush, the rally is very likely over. 20% discount on 16,000 is 12,800. It is obvious that the Japanese authorities would do everything in their power to stop Nikkei from printing this price level.
On short term basis, if the authorities step in to buy everything, Nikkei can drift back up to the midpoint around 14,800 area. It will take a long time before Nikkei can see 16,000 again. Should Japanese government bonds implode, the next lower target for Nikkei is the 100% mark in the original post below 11600.
Nikkei doubling its value at 16,000 from its 2011 year low is classified as one of the major signs of hyperinflation. The official definition says a broad based stock market index doubling its value within 2 years. Nikkei did it well within the 2 years boundary.
Hence, hyperinflation warning was triggered worldwide the moment 16,000 was tagged. Maybe the Japanese government officials want their stock market to go even higher. Obviously it is not allowed by other major economic powers from the way it’s been sold into crash mode.
It is important to remember that the signs of hyperinflation rarely lead to hyperinflation itself. Most of the time, as a stock market moves away from reality and that the rest of the economy has not followed, the hidden inflation would damage the internals of the economy so bad that the economy would snap into long term contraction.
It looks like Japan is heading in that direction now.
