Monday, February 3, 2014

NIKK Tokyo Nikkei Daily Chart Japan Officially Enters a 'Correction' Market

The dollar/yen is printing 101.75 falling through the 102 level about one hour ago. The Nikkei is puking another -300 points now at 14620-ish to begin the new week. The stronger yen, which sends the dollar/yen lower, sends the Nikkei and Japan and US stock markets lower. This is a reversal of the weaker yen during the Fall that sent Japan and US stock markets wildly higher into the end-of-year orgy. The thick purple lines show the -10% level now breached officially ushering in a stock market 'Correction' for the Nikkei. (A negative -10% market, index or stock move is considered a 'Correction' and a -20% move is considered a 'Bear Market'.)

The top was about 16300, now at 14620, so a drop of 1680 points in the last 4 weeks occurs. Funny how 95% of the pundits and analysts told Ma and Pa Kettle to place their entire life savings in the Nikkei, DXJ and other such vehicles as the year ended, only to see -10% disappear in a heartbeat. Ma an Pa now huddle around a Bunsen burner heating a can of beans for dinner.

The blue lines show an H&S pattern that targets 14100. The 200-day MA is 14400 which should be tested since price is now in the neighborhood. Back kisses will be needed to the 20 and 50-day MA's. The red lines show the rising wedge, negative divergence and overbot conditions that easily forecasted the spank down in price. In addition, note the text book bull flag during November and December (thin blue lines) that also signaled a top. Stochastics are oversold needing to see a price bounce. RSI is not yet oversold. MACD line remains weak and bleak. Price may explore the 200-day MA and then bounce to play around at the 14800 resistance and the top channel line at 15K. If this occurs, and the RSI does not reach oversold territory, price may want to come back down to the H&S target at 14100.

Moving forward, price may try to regain its composure and move through the sideways brown channel at 14750-15700 since this will serve to honor the back tests of the 20 and 50-day MA's. Overall, best guess, is that price will slowly recover as the 20 and 50-day MA's continue lower and price may move through the sideways 14100-15200 for the weeks and months ahead. Remember, stronger yen = lower dollar/yen = lower Japan and US stock markets. Weaker yen due to BOJ money printing = higher dollar/yen = higher Japan and US stock markets. Correction-wise, will the Nikkei lead world markets lower or is Japan a special case? This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.