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Asia Kabushiki Shinbun – October 9, 1996

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October 9, 1996

Mr. Armstrong, a Worldwide Analyst, Makes Bold Forecasts Again

Mr. Martin A. Armstrong, chairman of Princeton Economic Institute Inc., well known as an international technical analyst for a high rate of proving true of his forecasts and for his constant views, visited Japan and got an exclusive interview by us. When appeared on this paper last March, he pointed out that the sharp decline of New York market at that time would be temporary, to certify again the accuracy of his forecasts. He stated this time that the NY stock market would challenge 10,000 mark in the Dow and also pointed out that inflation would be most likely to arrive at Japan due to higher crude oil prices and depreciation of Japanese Yen. A possible high of Japanese stock market would be at 32,000 in the Nikkei 225 average at the maximum.

Proving True Forecast that the Sharp Decline of the New York Stock Market in March this Year was a Temporary Correction

Q: To begin with, how do you see the New York stock market renewing historical highs?

A: It is possible that the New York stock market will reach a high of 6,280 in the Dow at the maximum in October, especially in the coming two weeks time. The New York stock market challenges 10,000 mark in the Dow in 1998 at the shortest.

Thereafter, moves into Jan./Feb. next year will be a key point for a long term cycle to be decided. A correction phase going into Jan./Feb. next year will raise a possibility that the New York stock market will reach the 10,000 mark in the Dow sometime around June, 1998. On the other hand, a continued rally even into Jan./Feb. next year will most likely to form a bubble typed top. If this is the case, sell-offs to a level around 4,600 mark in the Dow in June, 1998 could unfold but, thereafter, the market would turn to a new bullish cycle to reach 10,000 mark in the Dow in 2003.

This view includes geopolitical uncertainties in a region like Russia and the Middle and Near East. What I am especially concerned about is the Middle and Near East. Each region there has come apart and an anti-Western Europe mood has widely expanded. This is a very big risk factor in the world economy. Our models show a sign that crude oil prices will rally to 32 Dollars per barrel in a short period of time. There is a possibility that crude oil prices will rally to 60 – 65 Dollars per barrel in a few years time to come.

A Kindling Factor in Crude Oil and Spurring Yen Depreciation…A Probability of Inflation in Japan

The Japanese Stock Market to 32,000 in the Nikkei 225 Average at the Maximum

Q: How about the Japanese stock market?

A: It will basically follow the New York stock market. The major resistance stands at 22,996 in the Nikkei 225 average. A monthly close above this resistance could lead to a rally to 24,000 at the least, probably to near 26,000. A key issue is the closing price for the year-end and it must be above 21, 121 – 21, 281 at the least. A failure to hold 21,121 at the close will raise a possibility that it will sell-off to 15,672 at the least or to around 11,500 at the most. This possibility depends upon a situation in the Middle and Near East as stated earlier. However, if we will see sell-offs to 11,500, this could be a new bullish factor and a recovery up to 32,000 in 1998 would be possible. Major support currently stands at 17,000 area and if this could hold, our target objective or recovery is 28,000.

Q: How about the foreign exchange?

A: As long as 104.65 will hold at the en of the year, we will confirm the Dollar’ up-trend for a few years to come, that is to say, a reversal of Yen’s hike. The current trading range is 104 to 113 but a weekly and monthly closing above 113 will shift the trading range to 110 – 125. I expect that a weekly closing above 113 will be achieved in a very near future. Our model shows the bullish reversal at 107.55 and a yearly closing above this will provide a strong buy signal for the Dollar. If this is the case, Dollar’s hike and Yen’s decline to 145 is guaranteed. Yen’s decline accompanied by commodity market’s hike brings inflation caused by external factors.

Profile of Martin A. Armstrong

Born on November 1, 1949. 46 years old. In 1986, established Princeton Economics International. In 1990, was named the top North American Economist by Equity Magazine. Submitted a research report to the Brady Commission for the investigation into the causes of “Black Monday” and provided advice to Presidents Reagan and Bush. In 1993, assumed the chairmanship of the Foundation for the Study of Cycles at Temple University. Funds he managers have a high performance of 30.35% per annum in average (in terms of Yen, after commission) for the period from 1991 to March 1996.