Buy Japan, Sell US


With the equity markets hitting all-time highs in many cases, we think it prudent to look around the world and determine if there are any better risk-reward countries into which one can invest or park money for the long-term. To this end, we believe that the multi-decade decline of Japan's NIKKEI versus the US's SPX has come to an end, and a multi-year bull market has begun.

Nikkei-spx 11-23-13

Our reasoning is technically simple: a bullish wedge breakout has occurred in tandem with a breakout of the long-term 170-week moving average. Moreover, this breakout is consolidating in sideways fashion - which we deem to be bullish. And over time, we expect the NIKKEI to outperform SPX by roughly +50% as the ratio above moves from 8.5 to resistance at 15.

Now, this isn't a short to move to be sure, but one that has merit over many years. Adjust accordingly. And may everyone enjoy as Happy Thanksgiving!

Good luck and good trading,

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