A number of Black Swan events have been ignored / killed by the markets (for the time being). Apart from Nikkei, there was no signficant follow through of selling in other markets, and dips have been bought hand over fists. Also, there have been news of significant buying of Japanese equities by western investments. Perhaps, this was among the the main reason for strong buying of Yen on 16 March 2011, rather than pure speculation or repatriation (Yen surge was later fought by G7 intervention).

Several trades were triggered based on previous analysis of January newsletter, details can be found below.



We had both Long and Short levels charted out, but none of them were set up. Daily chart shows that the price broke below 50SMA on 10 March 2011, but since then it has reversed and is now above both 50SMA and 20SMA. It is still within long-term bullish channel. Weekly chart showed a lot cleaner price action, after bouncing off 200SMA on weekly chart (as noticed in January newsletter), it created a doji type of candle (commonly called pin bar) and then continued the uptrend. Looking back at it, although I had weekly 20SMA as buying level, but I did not update my levels based on the movement of 20SMA. Next resistance is at 12500, after which any pullback should be bought with confirmation of bullish candles. Aggressive traders may look for counter trend short opportunities around that level.

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Update: make that JPY15 trillion:

The BOJ offered a combined 15 trillion yen ($183 billion)
into the banking system on Monday in its first same-day market
operation since the Greek debt crisis in May last year, to
soothe market jitters in the wake of a devastating earthquake
and tsunami that struck northeast Japan on Friday.
The central bank’s policy board will likely discuss whether
the sharp fall in Tokyo stock prices and the potential damage
from the quake to corporate profits warrant an immediate policy
response, the sources said.

We have since learned that the extra 3 trillion will be use to buy government bonds. Hello QE, my old friend.

Original post

Total reactionary panic everywhere now as the BOJ hikes the liquidity injection from 2 to 7 to 12 trillion yen. And this is likely hardly the end: “BOJ Governor Masaaki Shirakawa told reporters late yesterday he’s
ready to unleash “massive” liquidity starting this morning in Tokyo.”
From BusinessWeek:

 “The Bank of Japan said it will pump a record 12 trillion yen ($146 billion) into the financial system to help stabilize the market after the nation’s biggest earthquake on record last week threatened an economic recovery.

The emergency measure represents the bank’s first same-day repurchase operations since May, when the central bank added funds to help stabilize the market after the Greek debt crisis set off a plunge in stocks worldwide. BOJ Governor Masaaki Shirakawa told reporters late yesterday he’s ready to unleash “massive” liquidity starting this morning in Tokyo.

“The Bank of Japan will provide plenty of liquidity and there are no disruptions in the interbank market,” said Toshiaki Terada, a researcher at Totan Research Co. in Tokyo. “The bank will probably add more funds if needed.”

It is possible that following the latest reactor explosion this amount will be raised once more before the US night is over.  We are somewhat skeptical that throwing infinite capital at a clusterflock of black swans will do much, but are happy to be proven wrong.


Original source at: zero hedge - on a long enough timeline, the survival rate for everyone drops to zero | http://www.zerohedge.com/article/boj-raises-liquidity-injection-jpy12-trillion-146-billion

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