I wrote last week (referring to oil) that the best bull markets are the ones that no one is talking about.
Markets thrive on steady fundamentals for awhile and then the hype train leaves the station and they go parabolic like Apple, Bitcoin, the Nikkei and USD/JPY. Once they start accelerating higher, they keep on going until they’re on the tip of everyone’s tongue. When your punter, CNBC-watching neighbor is talking about the Nikkei, it’s time to get out. Parabolic markets get extremely dangerous, as those examples illustrate. The Nikkei cracked 8% one day on no news and continued a total of 21% lower.
To illustrate, this is a news search graph of stories with the terms ‘Nikkei’ and ‘Abenomics’.
stories that mention nikkei and abenomics
Since mid-June, the Nikkei has become the forgotten market; it moved sideways and volatility cooled. But since the last trading day of June, it’s quietly gained 10.6% and is now just 6.5% from a record close all with minimal notice. The WSJ wrote about the Nikkei today, so the move is going a bit more mainstream but they made some good points.
“A lot of the ‘hot money’ has dissipated,” says Tachibana Securities market adviser Kenichi Hirano. “This allows for a more natural market rise based on hopes for better corporate health and asset appreciation under Prime Minister Shinzo Abe’s monetary stimulus and longer-term economic reforms.”
Another thing about that story, it ends on a pessimistic note, saying that Japan has “a long history of futility to redress.” The best bull markets are built on pessimism.