Get started

Abenomics

Gone Too Far…As the world remains engrossed in the unfolding drama of the debt ceiling, we believe another event of significance deserves our attention. Let's take a brief detour into the annals of economic history, looking at the era of Abenomics. This term refers to the monetary policy instituted during Shinzo Abe's second term as Prime Minister of Japan. Abenomics rested on the foundation of "Three Arrows" - aggressive monetary policy, fiscal consolidation, and a robust growth strategy. The outcome? The Nikkei embarked on an impressive bull run, seemingly unstoppable in its upward trajectory. This performance becomes all the more remarkable when compared to the S&P500, which managed a modest gain of only 12% over the same period. This comparison sparked an intriguing question: How do these two indices compare now, especially with the Nikkei shattering two-decade highs? When we chart the spread, the ratio of Nikkei 225 to S&P 500 stands on the brink of upper resistance, a boundary that has proven significant for nearly a decade. A more granular exploration of each index reveals some compelling details. For the S&P 500, we observe a break of the upper resistance as well as a break from an ascending triangle, both of which signify a bullish continuation. While RSI has not yet reached the overbought territory. On the other hand, the recent surge in the Nikkei 225 index has been robust and swift, surpassing the 2021 highs, with the RSI indicating an extreme overbought scenario. Thus, we suspect that the Nikkei's meteoric ascent may have overshot its mark. This situation presents an intriguing trading opportunity: shorting the Nikkei 225 / S&P 500 spread. This can be executed by shorting the Nikkei 225 Futures and going long on the S&P 500 Futures. To match the Nikkei 225 USD contract size at the current price of 31,300 with a contract value of 31,300 x 5 = 156,500 USD, we could utilize the Micro E-Mini S&P 500 Index Futures at the current price of 4,215 with a contract value of 4,125 x 5 = 21,075 USD. Hence, to balance the position size, we could employ 1 Nikkei 225 contract and 7 Micro S&P 500 contracts. The Nikkei 225 USD Futures represents 5 USD x Nikkei Stock Average. Prices are quoted in US dollars and cents per index point, each 5 point move is equal to 25 USD. The Micro E-Mini S&P 500 Futures represents 5 USD x S&P 500 index. Prices are quoted in US dollars and cents per index point, each 0.25 index point move is equal to 1.25 USD. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.adb.org www.cmegroup.com www.cmegroup.com
TVC:NI225Short
by inspirante
Yen about to suffer or benefit from geopolitical uncertainty?The USDJPY is approaching a key level on the weekly chart at 110.30. However is this an opportunity to long given the obvious fact that both countries have different monetary policies ? Or given the fact that Abe's popularity is tanking as a result of the scandal may cause markets to reassess the probability of him seeing his abenomics policies to fruition remains to be seen. Read more about it. www.bloomberg.com Thus, probable scenarios moving forward a. 110.30 supported with stop below 108.00 with target at 113.40 and above (Month end flows and FOMCweek) b. 110.30 breached and weekly trendline broken but supported at 109.30 (USDOLLAR continues to tank without finding support) c. Sideways trading between levels 108.40 and 110.30 (Directionless until NFP in August )
by revelationtrading
USDJPY: BOJ DEPT GOV IWATA - MORE WORDS, NO ACTION; SELL 101/2.5BOJ dept Gov Iwata was the most recent in what seems to be a slew of attempts by JPY officials, whether it be Govt or BOJ to try and weaken the Yen with yet again more dovish/ promising rhetoric. Statements such as "prepared to loosen policy further without hesitation" where in my mind no doubt undermined by the BOJ's seemingly blind assesment of future expectations - with Iwata claiming inflation should hit 2% by the end of 2017, even though policy is relatively unchanged since January where inflation has gotten worse so i dont know how JPN is going to pull off what would be the fastest increase in inflation in history. Further, comments such as "BOJ increased ETF purchases to prevent worsening of corporate and public sentiment" were naive at best.. 30bn of etf purchases in a year amounts to that of an average sized hedgefund OR a very small asset manager, so how he thinks such action will uplift the worlds largest economy with increased measures of less than 1% of its GDP more than baffles me. BOJ/ Govt seem deluded to the greatest extent, or more realistically - holding $yen shorts from the start of the year, no poilcy but strong rhetoric certainly supports this view (humorous). More seriously though, BOJ et als inability to take real responsibility for printed targets, and make policy = words to me makes the future clear for $yen trading. Lower is the only direction that is clear from here - in what was the most pressured BOJ meeting, from both markets and govt perspective, the BOJ performance was dismal so it leads the question, if not now why would it ever change? And Iwatas comments back this up, from the dept govs view, JPN is on firm track to hit its targets in amazing fashion.. so with such strong/ positive views (even if no data supporting), why will BOJ ease drastically more? they wont, as if most share his sentiment (which they do with most not voting to change the rate or JGB purchases which make up the bulk of the easing programme). So all in all, Iwata's and previous speakers comments firmly in mind short $yen is now my view - after being a strong $yen bull on the basis of big easing with risk-on spill overs. Fading rallies seems appropriate and the 101.5 level today held unfazed which looks like a good level to add shorts for the imminent 100 level break. On the way down 101.5 was an intermediate level, 102 was the key so I am surprised it held and would prefer to short from the 102 nonetheless (much more likely to hold and 50 more easy pips of downside). BOJ IWATA SPEECH HIGHLIGHTS
Short
by QuantumLogicTrading
Nikkei: Fade overbought ralliesNikkei is consolidating forming a bell curve, if you look at the profile shape from the low. The weekly downtrend that fired in August has now expired, which means there's a possibility that price goes up to retest the downtrend mode. I see this as improbable and would suggest looking for shorts once the targets on chart are hit, or the low volume resistance zones tested. The last daily leg implies further upside, but rgmov is at abysmal levels and forms new lows, so, it's possible that this move fails and it heads down from here. If that were the case, next week we will have a new mode, lower, so we could look for time at mode trend signals, which would more or less imply the Nikkei will travel down to test previous support levels. Once we have clarity here, we will know wether to consider Yen longs or not. For the time being, I'd only try short term swing trades in the yen pairs. Regards, Ivan Labrie Time at Mode FX
FX:JPN225Short
by IvanLabrie
2
USDJPY: Longer term perspective is still bullishI've been watching this chart closely, and I think we might see a great buy setup in the near short term. Eyeing the area between 121.43 and 122.34, with invalidation for this signal below 118.968, potential upside is 137.94 in 6 months or less. We don't get significant trends in FX very often, and this is one of them. I'll be monitoring the Yen to enter a longer term position in it, since I consider the risk/reward and probabilities to be on the bullish side here. The fundamental odds favor this position as well, I included The Working Trader's idea in the related ideas field since I consider his input valuable. It's good when both technicals and fundamentals agree, just have to be patient for the right setup to pop. Good luck, Ivan.
Long
by IvanLabrie
12