[Stocks] Why did the market surge in just one day after the sharp drop following Abe's resignation?
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The person behind this sharp-tongued sister worked at an investment bank, went independent, and now lives as a professional investor.
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(▶ 'Track Record of Market Predictions')
Prime Minister Abe announced his resignation at 2:00 PM on August 28th, causing stock prices to plummet temporarily. However, on the next business day, August 31st (especially in the morning), stock prices surged in just one day, almost returning to their previous levels.
It wasn't just a gradual recovery; it shot back up in a single day, so I'm sure many of you were surprised, right? Let me explain the reason.
From the Friday when Prime Minister Abe announced his resignation through Monday, the media, including television, was heavily pushing 'Chief Cabinet Secretary Suga'.
As I wrote in detail in my previous article about Prime Minister Abe, the biggest reason stock prices fell after his resignation was the concern that
'Abenomics (the policy where the Bank of Japan buys large amounts of stocks) might be discontinued.'
But 'Chief Cabinet Secretary Suga', who is currently the leading candidate in the media and within the Liberal Democratic Party, has declared that he will 'continue Abenomics'.
That's why stock prices rebounded so sharply in just one day!
Future Market Forecast and Investment Strategy
Even though the current Nikkei Stock Average is already heading toward record-high levels, almost all technical analyses—including daily charts, moving averages, MACD, and the Ichimoku Kinko Hyo—are indicating the 'beginning of an upward trend'.
However, vaccines are still just promises of orders and are far from being completed, and the current rise in stock prices is driven entirely by 'technical indicator fundamentals' and is
'completely disconnected from the real economy'.
Also, as I explained in detail in this article, the real economy is in tatters due to the coronavirus, and in the first place, the value of the Nikkei Stock Average in the real economy is around 12,000 to 16,000 yen. (In other words, it's a huge bubble right now.)
Technically, there are signs that stock prices will continue to rise, but please be careful and trade stocks while keeping in mind that we are in'an unstable state where a crash or a downward trend could happen at any time'. (Of course, there is a high possibility that it could happen as early as tomorrow!)
'For the time being, it is most effective to view the basic trend as upward while being prepared in advance for sudden crashes or downward trends.'
Did you learn something today? If you found this explanation interesting, please be sure to read the following explanations as well. (For those aiming to become pros at stocks or wanting to make big, stable profits)
◯ [Stock Investment] How to make large profits [From beginners to advanced users]
◯ [Stocks/FX] How to never have a 'slow and steady, then sudden crash' again [How to buy reliably at the bottom?]
◯ [Stocks] How to identify people holding unrealized losses
Let's keep doing our best together!
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