Time to Buy The Nikkei Stock Index!

The Nikkei futures index had crashed 16% during Tuesday’s (Mar 15, 2011) afternoon session in Japan. The crash was sparked by Prime Minister Naoto Kan’s announcement on national TV broadcast saying “substantial amounts of radiation are leaking in the area” around Reactor #4.

This is on top of the last 2 trading days activity. Here’s a summary of recent Nikkei 225 activity:

Date

Nikkei 225 Close

% Change

03/09/2011 10,589.50
03/10/2011 10,434.38 -1.46%
03/11/2011 10,254.43 -1.74%
03/14/2011 9,620.49 -6.18%

As of about 1:05pm Japan time, Nikkei 225 down to 8228

That is a 14.47% drop in the cash index, and the index futures were down 16%.

At 8228, the Nikkei 225 cash index would be down a total of 22.3% since last Wed, March 9.

Zap!

Now is the time to buy!!

This is a huge over-reaction and we expect a big bounce, even if the Nikkei closes down 6% today (on top of 6.18% yesterday), that’s an 8% gain if you BUY RIGHT NOW.

Now I realize not everyone will be reading this right now, but even if you are getting in later today…

Consider the following:

  1. 3 of the 4 reactors are under control with cooling stable.
  2. The fire from reactor #4 causing radiation leakage fears is an over-reaction because the radiation levels are *elevated* but not yet *dangerous*.
  3. The current radiation detected are not only small amounts, but they are xenon-137 and iodine-131, which have a half life of 3.8-minutes and eight days respectively. (The release of cesium-137 with half-life of 30-years is the big, but very remote risk.)
  4. Comparisons to Chernobyl are overblown because Chernobyl did not have mltiple containment chambers and was a different kind of reactor. When a water reactor loses cooling and goes into meltdown, it shuts itself down. While there is still risk of fuel rods melting, the meltdown is much less severe.
  5. Even in the worse case of a meltdown with radiation leakage, the number of people who died or had health abnormalities from Chernobyl was very small, i.e. 30 people died and UNSCEAR says that apart from increased thyroid cancers, “there is no evidence of a major public health impact attributable to radiation exposure 20 years after the accident.”

I am long. If you are a contrarian trader, *now is the time to go long*.

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2 Comments

  • Hi, how can regular people buy stock?? do you know?? have you bought any? How do you go long? please let me know more about this if you have a chance. Thanks a lot.
    Ms. Terrazas

    • The easiest way to trade the Japanese market in the US is to use ETF’s. The ETF’s will trade just like a stock and you can even buy them in many retirement accounts if you can buy any stock.

      To go long the Japanese market, “EWJ” tracks the MSCI Japan Index which follows the Nikkei pretty closely.

      For leveraged ETF’s, Proshares has 2x ETF’s: “EZJ” for 2x long, “EWV” for 2x short.

      I’ll have to post an ETF intro soon.

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