Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Another wacky session in Tokyo as the Nikkei fell over 5% – in just 6 sessions this index has fallen from “stratosphere” to its 50 day moving average. Stockcharts.com won’t update this until the end of the day but today’s move took the index down almost exactly to the 50 day moving average. Today’s move was a 700+ point drop
Then after the close, Nikkei futures rallied some 400 points on a news report that Japan’s pension fund would be looking to increase its allocations to equities vs bonds.
- Japan’s public pension fund – a pool of over $1 trillion – is considering a change to its portfolio strategy that could allow its investment in domestic stocks to grow with a rallying market, according to people familiar with the deliberations.
- The changes, yet to be finalized, would mark the most significant revision in investment strategy for the world’s largest pension fund since 2006. Without the shift, the Government Pension Investment Fund (GPIF) could be forced to buy Japanese government bonds, already the biggest part of its portfolio by far, in a weakening and more volatile market. It could also have to sell Japanese stocks.
U.S. futures likewise did a U-turn turning losses into gains as I type.
Please note that per the NYSE McClellan Oscillator this is the most oversold the market has been in 2013. Considering the S&P 500 is still over the 20 day moving average even as we have this sort of extreme reading shows you just how overbought we were (as noted last week, on weekly and monthly time frames).
It had been a very placid May up until the past week – but it really wouldn’t be summer without futures wildly swinging up or down on a day to day basis due to overseas events would it? (circa 2008-2009-2010-2011-2012)
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
