What the Japanese earthquake means for the global markets.

Japan, the third largest economy in the world was already struggling to get out a major recession. On Friday, the nation was shaken up by a 8.9 (9.0 as measured by authorities in Japan) earthquake followed by a tsunami. This certainly has a big, if not huge impact on its economy. Since economies are interconnected globally we will see (and already have seen) a ripple effect on all economies in the world.
Today the Nikkei lost a whopping 633 points, more then 6%! European stock markets were down because of it and the Dow Jones is trading now lower on worries on Japans economy.
A logical follow-up question for investors and traders alike is, how much lower will it go, and where to go from here. A nuclear reactor with the possibly of blowing up doesn't make investment decisions any easier. It certainly tossed some unwanted things in my trading plan. Oil seems to have settled in around the $100 a barrel range, but can spike any moment depending on developments in the middle-east.
In other words, the economy on a global scale is a big mess. And market direction is pretty hard to find with so many outside sources pulling and pushing the volatility needle.

So is there any good news? Maybe. The area where the tsunami struck in Japan eventually needs to be rebuilt. Already there is speculation in the steel markets etc, but this won't happen anytime soon. Putting your money in 'rebuilding Japan' commodities seems a little too risky to me at the moment.
There are however a few things we can keep our eye on. Like I said before, the Nikkei lost over 6% in its first trading day, as expected by everyone, but is this a panic reaction? Are Japanese stocks oversold? In this case, technical studies indicate they are severely oversold, is this a reason to buy in 'cheap' Japanese stocks and ETFs? I don't think so. If that nuclear reactor blows up stocks may slide even further.

Take a look at this chart; The Nikkei 225 (Japanese stock market)

This incredible plunge to 9620.49 was expected after the monster quake but is still difficult to look at. Question is; where to next? I recommend the following ETFs and stocks;