[ACY Securities] Japan's earthquake stock market rebounded, how long can the only easing policy last?

In the early hours of yesterday morning, a 7.4-magnitude earthquake struck off the coast of Fukushima Prefecture, Japan, causing communication failures, power outages, traffic stagnation and depot shutdowns in some areas. Such a level of disaster undoubtedly made investors worried that it would affect the Japanese stock market. However, the Nikkei index not only did not fall, but maintained an upward trend, and closed three consecutive positives with the US index. The reason behind this is the phenomenon of the stock market "exhausted" caused by the Fed's interest rate decision mentioned yesterday. Moreover , the Bank of Japan also said yesterday that it will not follow the Fed to raise interest rates, giving the market a reassurance. The Nikkei also performed better than the European and American stock indexes. So does this mean that the Nikkei is a long-term investment?

Indeed, a country's monetary policy has the most direct impact on its stock market. Policy easing stock market rises, policy tightening stock market falls, this phenomenon is not uncommon in the recent market. However, no matter how the policy changes, the long-term development of the stock market depends on the quality of the national economy . The dilemma that Japan is currently facing is that rising inflation has not driven economic development, and prices pushed up by the cost side (crude oil prices) may instead limit consumer demand. Called stagnant inflation in economics and a precursor to a recession in the country, Japan's economic outlook is not optimistic.

Looking back at monetary policy, yesterday's rebound in oil prices will undoubtedly push up inflation again and accelerate the pace of tightening by central banks. However, Japan is currently the only developed country that insists on easing, which also makes many Japanese investors feel gratified. But investors need to understand that monetary easing has become the norm in Japan, and conventional policies have long been unable to meet the needs of economic growth. This is like a flat tire. Simply inflating it can only solve the temporary need. Only by repairing the tire can the fundamental problem be solved. The "tire repair" action that the Bank of Japan needs to do is a large-scale policy stimulus, and this is the reason why the Nikkei index rose and fell sharply. At present, Japan's "large-scale" stimulus can be described as a long way off.

JP225 daily chart

Judging from the daily chart of the Nikkei, with oil prices falling and the Federal Reserve raising interest rates, the index price rebounded sharply, but it was still suppressed by the 27,000 position of the head and neckline. The 100-day moving average remained downward, and the bear situation was more obvious. Taking into account the above-mentioned fundamental impact, you should still choose to short the Nikkei. Due to the strong short-term upward trend, there is still the momentum to ascribe higher within the day, so the trading strategy is mainly to short-term rallies. The timing of entry mainly depends on the falling relay position of 27000-27700, and the timing of entry pays attention to the dead cross signal of the overbought zone of the stochastic indicator. The support below the current price depends on the previous low point of 25,000 and the level of support at 24,000 before the epidemic.

Today's attention data

14:30 Bank of Japan Governor Haruhiko Kuroda held a press conference

18:00 Euro zone trade balance after seasonal adjustment in January

20:30 Canada January retail sales monthly rate

22:00 US February Existing Home Sales Total Annualized

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