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April 4, 2006

Japanese equities take a small breather, Tues., Apr. 4, 2006, 7:51 AM

After hitting an intra-day, 52-week and multi-year high of 17,387.10, the Nikkei 225 closed off -40 points on the session. Since this market index has risen almost +5 pct in just 4 days, it needs a breather.

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Is the Nikkei Dow going higher? On a strictly technical basis, it could go much higher.

The U.S. trading EWJ (Japan equity index fund) presently stands at 14.64. Regardless of how the broad U.S. equity market fares, I believe there are reasonable prospects in 2006 for EWJ to at least test the 1996 and 2000 highs of over 16.

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Fundamentally speaking, the Japanese economy is not fighting the personal and government debt and deficits, or the inflation, or the rising interest rates that exist in the U.S.. So there is a strong currency. Moreover, there are exceptional products being manufactured for export as well as excellent prospects of selling to the rapidly emerging economy in nearby China.

So, I believe that Japan will continue to out-perform the U.S. equity market.

I first brought Japan to your attention in May 2004, saying at the time it would likely become the market of choice. And it has.

Posted by Posted by Bill Cara on April 4, 2006 07:52:12 AM | Category: Japan