Archived IMT (2008.10.27)

Resistance and support levels mentioned in the previous Intraday Thought continue to hold in the face of the recovery in stocks and risk appetite and European currencies. Stay alert from change in sentiment after 3 pm EST. Chances of a successful yen-selling intervention are weak at best as long as the currency remains boosted by i) capital fleeing back to the yen from all major currencies and ii) a break in Japanese investors' purchases of foreign equities as the 26-year low in the Nikkei erases their wealth and risk appetite and keeps capital at home. As the world's biggest provider of capital maintains a home bias, the world will remain deprived of Japan's liquidity. As household and corporate investors suffer massive capital losses to their holdings, the effect of capital repatriation and lack of fresh foreign outflows reinforces the upward spiral in the yen, drags down Japanese exporters, Japanese stocks, thereby, further undermining global market confidence.