Updated: Apr 17, 2019
The last time we caught up with NKD, it had just broken down from a rising channel dating back to 2008 and looked to be in a precarious position. From FOMC Day: Dec 19, 2018:
[NKD’s] rising white channel has broken down and it’s testing its June 2015 highs for the 6th time. The critical difference this time is that it experienced a death cross back on Dec 7. So, a drop through 20990 should be shorted for 19665 and, should that fail, 18631.
NKD did drop through 20990, and plummeted another 2030 points (9.7%) over the next four sessions. It bottomed at 18960 on Dec 26, the session after Mnuchin saved the world by convening the Plunge Protection Team.
We all know what happened next. VIX was hammered by 69% and US stocks have recovered 99% of the 20% plunge suffered between September and December. NKD — which is overtly supported by the BoJ — has only recovered about 61.8% of its losses. Furthermore, it is bumping up against the broken white channel — a backtest.
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