Nikkei Crashola

And this is the risk you take chasing an asset that’s gone parabolic. We’ve discussed this before, Escalator Up and Elevator Down. It’s just the way the market behaves. It’s normal. But especially so when the escalator has taken you this high for this long without a correction. The elevator shows up and you’re donski.

And let me tell you, it’s difficult to watch the nikkei grind higher every day without you. It’s hard not to chase it. But Mr. Market makes it hard, that’s its job. You need to keep telling yourself, this is what’s coming. I don’t know when, but it’s coming. Who knew? It came last night.

Here’s what Nikkei futures did this morning – down a cool thousand points:

5-23-13 nikkei

And who knows how long this correction lasts. Probably longer than any of us think. Or maybe not. This type of stuff isn’t really our game. We liked it back in the fall and we took our profits when it hit our targets. Our bad was not getting back in after some further consolidation in February and March. But once April and May came along, chasing this thing wasn’t worth the risk. As hard as it was to watch it grind, it’s nice to see the market do its thing last night.

I know the majority of my readers aren’t day trading nikkei futures, so let’s just watch this one as a nice lesson for the future. For you guys new to markets, please understand that this is both normal and well deserved. For the market veterans, I know you’ve seen this before, and we know we’ll see it again.

Here’s to remembering the Nikkei next time we consider chasing….


Tags: $DXJ $NK_F $EWJ