When the music stops

Nikkei 225 dropped another 469 points (3.22%) on Monday for a total lost of 11% within 3 days. However, buyers were able to keep the index above its last Friday's low of 13,981.

The run-up since October was due to the massive Yen printing by the Bank of Japan. The excessive money printing has also caused the value of Yen to drop from 79 yen : US$ 1 before the run-up to 102 yen : US$ 1 last week.

Marc Faber, “The government in Japan will continue to print money…. The yen is oversold and stocks are overbought …….. But, any time the market would drop in Japan and the yen would strengthen, there will be more money-printing.”

This is only a normal correction to its 83% run-up. As long as the US market can hold and the US$85 billion a month injection continues, assets and stocks will continue to move up.

In July 2012, Nouriel Roubini, dubbed 'Dr. Doom', was talking about a possible global 'Perfect Storm' in 2013 due to worsening debts crisis in Europe, slowdown in China and emerging markets, projected recession in US and possible confrontation with Iran.

But by early March, 2013, his view was 'short-term bullish, long-term catastrophic'. 

By end of April, 2013, he was predicting an uptick in stock prices over the next two years as the Federal Reserve continues its stimulus programme. Click 'Buy stocks while you still can' the article.

If that is going to be the case, the mega wave 1 is likely to have 9 major waves. Dow is currently in major wave (5).

I am talking about the mega wave 1 of the super wave VII. When the mega wave 2 comes, Dow can go all the way to 6547 level.

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