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The chart directly below reflects a 6 month rally from 11/20/12 to 5/20/12 of the Nikkei and S&P 500, in which the Nikkei gained over 48% more than SPY. I am of the belief that its important to watch the action of the hottest stock market in the world.
The above chart reflects that on 5/20/13, the Yen hit its 38% Fibonacci support level and the Nikkei hit a falling overhead resistance channel that has been in play for the past 20 years!
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The chart below reflects what has happened since the Yen hit support and the Nikkei hit resistance….as the Nikkei is down 8% and the S&P has made a modest 1% gain!
This performance reflects that the Nikkei could well have an influence on the S&P 500!!!
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The top chart reflects that that Yen could be breaking to the upside of a pennant pattern at (2) and the Nikkei is testing a key support line at (2).
Yes what happens in D.C. is important, don’t get me wrong!. Do realize this, the action in the Yen and Nikkei took place 5 MONTHS ago and it seems to continue to impact the S&P 500 today.
Investors beware of this…If the Yen should happen to take off to the upside, it would impact the Nikkei and S&P 500 in a negative way!
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