Japanese Meltdown — Stock Indexes are Looking Radioactive

Major Japanese stock indexes are on the edge of the cliff

The charts of the major stock indexes in Japan are on the edge of the cliff. The Topix, iShares MSCI Japan Index Fund and Nikkei Dow are at critical support levels. Traders with Japanese exposure should watch these support levels carefully. A penetration below these support lines would indicate that the “dead cat” bounce from the March lows is over.

Trading strategy

The trading strategy I like best is being short the Osaka Mini Nikkei or short EZJ, the Ultra Long ETF. The global stock indexes are famous for bull and and bear traps. The Japanese market, especially, often generates a false signal just prior to a big move in the the other direction. So, I will be very flexible with these markets. Should I short the Japanese market (the mini Osaka or the ultra long ETF), and should the market reverse back to the upside, I will double up going long.