Has the Nikkei 225, the Japanese stock market index that has been on a losing streak for a few months, now turned around? During this month, the Nikkei index has been gaining and during the last week it has hit its highest point in 4 months.
 
In the beginning of December, the Stock Trend Investing system warned that if the Nikkei 225 would decline another month during December, it would issue a sell warning for your holdings in funds that are expected to follow the Nikkei. We noted that those investors who firmly believed that the Nikkei would decline again during December, could as well sell already.

The Nikkei in December, assuming that we do not see a drastic turnaround during the last few days of the year, has proven the hasty investors wrong. Those who sold their Nikkei related funds at the beginning of December have missed the latest rally.

Why was there no sell warning for the Nikkei yet?

The Stock Trend Investing system has been designed in such a way to discover trends that are expected to last at least 3 to 6 months. According to the system, the trend in the Nikkei in the months leading up to December was not clear enough to issue a sell warning at the beginning of December already. The system was right. It was too early for that.

Now, do we expect the Nikkei 225 to go up the coming months? We don’t know. With the increase during December, the Stock Trend Investing system does not provide us with a sell warning or buy signal for the Nikkei. This means that to us there is no clear trend up or down in the index.

What shall Stock Trend Investors do now?

So, what should Stock Trend Investors do? This is of course each individual’s choice. Those who want to be diversified and already own funds that relate to the Nikkei index do not need to sell. On the other hand, if you see a better allocation for your money in a market where the trend is clearly up, you could move your money there.

If you do not own funds related to the Japanese stock index yet and you want to invest some more money, it is probably better to look at a market with a clear uptrend.

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