Japanese Stock Idea

 Hi Shoppers,

 

Hi Shoppers,

 

I dug deep this weekend to find an interesting candlestick formation in the iShares MSCI Japan ETF (Ticker:  EWJ).

 

Next, I began to research current events in Japan. That, of course, led to plenty of Olympics coverage.

 

I also read through numerous articles related to Japan’s economy and there was the occasional odd headline, like “Why Young People in Japan Stopped Having Sex.”

 

Not sure we wanted to talk about young people having sex …

 

But thinking of Japan’s economy, remember when we were so frightened of the Japanese taking over all the real estate in the U.S. in the 1980s?

 

The icing on the cake was in 1989 when Mitsubishi bought Rockefeller Center for $846 million.

 

So, I looked at the Japanese companies stock charts and this is what I found:

 

Sony (Ticker: Sony) traded 403,000 shares on Friday.

 

Toyota (Ticker: TM) only traded 140,000 shares and Mitsubishi (Ticker: MSBHF) traded 670 shares.

 

I was shocked.

 

In contrast, Chinese giant Alibaba (Ticker: BABA) 31,718,000 shares traded Friday alone.

 

XPeng (Ticker: XPEV) traded 6,821,000 shares and Baidu (Ticker: BIDU) 3,618,000 shares.

 

Where was China in the 1980ss?

 

Believe it or not, it was enjoying a newfound freedom after the death of Mao Zedong in 1976 — he had China in the grip of poverty and fear for ten years prior to that.

 

The government opened the market, bringing in imported goods, books and entertainment from other countries.  

 

Studying in Tiananmen Square 1981.

 

People returned to the cities from communal farms, and speech wasn’t strictly policed.

 

But it didn’t last. 

 

By 1989, people, mostly students, began to gather to protest for a more open democratic government, free speech, free press and a better education system.

 

The protest grew to a million people and sadly ended as the Tiananmen Square Massacre.

 

Where are we all now?

 

Well, financially we are all three there at the top ranked by GDP:

 

 

Socially, culturally, and all else that matters. Well, that’s a different story.

 

Trade Japan

 

Scouring the stock charts, I found this in the iShares Msci Japan ETF, which traded over 4 million shares on Friday:

 

 

Friday’s candle is a bullish engulfing candlestick as it is green and covers the whole red body of Thursday’s candle.

 

I think EWJ can trade back up to $70 within the next two weeks.

 

 

I know the options volume and open interest numbers aren’t there — these options are not trading much.

 

But the market width isn’t too bad and I think the Sept.10 68-strike calls, $.13 in the money, are a good buy.

 

If EWJ opens up and trades higher on Monday, I would pay $.73-$.75 for these calls.

 

Trade Review

 

Last week I had two recommendations, Peloton (Ticker:  PTON) and General Motors (Ticker:  GM).

 

      • PTON did not follow through, so I did not execute the trade.
      • In GM I bought the Sept. 10 50-strike calls and paid $1.20. They closed at $.96 on Friday. The chart is still looking good and I believe these will be winners this week.

 

The Ford (Ticker: F) chart is looking bullish to me also so I am sure there are some cheap calls to be had in there, as well …

 

Thanks for Reading … See You Next Tuesday!

 

Licia Leslie

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