It’s fun to be Shinzo Abe these days. He’s become an economic rock star and even has a Wikepedia page to describe “Abenomics”.  Here is what Abenomics is :

It consists of monetary policy, fiscal policy, and economic growth strategies to encourage private investment. The detailed policies includes inflation targeting at a 2% annual rate, correction of the excessive yen appreciation, setting negative interest rates radical quantitative easing, expansion of public investment,buying operations of construction bonds by Bank of Japan (BOJ), and revision of the Bank of Japan Act.

I don’t know what else to say other than I still love the long Japan trade via  $DXJ and very short the Yen via $YCS.  It will probably end in tears two years out, but for now, you need to be long this bubble.

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This stage of the market is really one of disbelief in my opinion. It seems to go higher everyday as most just watch.  It’s been a record 177 days since the market has corrected 5% . By the way, Tuesday is the best day of the week ,as we have seen 17 straight up Tuesdays.  In 1968 we saw 24 “up” Tuesdays in a row.

Corrections can happen in two ways, “price or time”. Meaning that we don’t necessarily have to pullback hard to shake out weak hands. It can just settle and consolidate constructively over mini time frames. Of course the market can get hit hard and pullback, I’m just saying that that isn’t the only way we can consolidate gains.

Hedge funds aren’t close to keeping up with the benchmarks and many chief investment strategists at the bulge bracket firms still have $SPX 1350-1450 targets by year end.  As an example, I watched the chief equity strategist at Wells Fargo get interviewed yesterday. She has been at a 1350 S&P target since January and sticks by it. She seemed nice, but seemed better qualified to manage your local bank branch.  Her 401k is probably jammed with her own Wells Fargo stock, but she has probably never bought a stock. I’m rooting for her.

I’m neither a Pollyanna or a perma bull, but I know when you need to be long stocks. You are fighting an epic global market manipulation to do otherwise.

So if you think you missed the move you really haven’t. To give some perspective on this, look at the chart of the financials below. Yes the banks have moved, but they aren’t close to where they probably will be.

My best advice is not to chase stocks that have already ripped, but do your homework and focus on set ups that haven’t even started to move but are developing technically. Good trading.

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“I don’t want to go from wild turkey to cold turkey”- Richard Fisher, president of the Federal Reserve Bank of Dallas

The $SPX made more closing highs last week as the Gilded Age for stocks continues. Next week we have Fed governors galore, so watch for any subtly telegraphed hawkishness on that front. The Fed wont upset the apple cart with strong language on a policy change, and has admitted that any pending change would be gently delivered to the markets. You never know though, how the market will react and we are at highs, so if you catch the market in a bad mood, it could be a catalyst for a slight pullback. So keep that in mind next week.

The big news last week though was Japan. The Dollar/Yen ($USDJPY) broke through par as the Yen started to get crushed to pixie dust. Get on this train because this move has at least a year left in it. As you know, long $DXJ and $YCS are my favorite plays in this space and continue to be. Again,  not a trade, but a core position going forward. Bank of Japan governor Kuroda is having too much fun right now and he loves the sound of printing and buying stuff. I can just see the texts between Bernanke and Kuroda as they giggle like little kids. I’m so bullish on global printing, not global growth because there isn’t much of the latter. There is a difference. Don’t kid yourself into thinking that markets are moving higher on organic growth. The G-20 loves this move by Japan and was high-fiving them with praise all of last week. This trade has juice. This is the only reason dips keep getting bought in this tape.

There are incredible things happening to this market right now (not the economy, but the market).

If you find yourself struggling in this market, or just want to broaden your reach on some things, come by for a free trial.

Have a great weekend.

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As you can see above, the Yen collapsed against the dollar today. I mentioned this morning on the chat that this looked like it would happen soon, but I didn’t think it would happen so soon or with such violence. Anyway, it was great for our YCS position and DXJ joined the party too.

Just for your information, Nikkei futures are up over 2.1% as I write this.

Based on the drop in the Yen, YCS had a great breakout move.

DXJ- Not only made new highs today, but it put in a bullish engulfing candle (bullish) and MACD turned up. Looks higher.

Stanley Drunkenmiller, the famous hedge fund manager, and one of the greats, thinks you get 16 months out of this Japan trade. I agree. It’s hard to stop the presses from printing once they have started. It will all end in tears (maybe two years out), but for now enjoy the ride.

Have a great night ans please check the P&L for any stop adjustments.

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