Tuesday, September 8, 2015

NIKK Nikkei Index Daily Chart Turns Negative on the Year

Japan is slip-sliding as the sick and weak economy sputters along despite the multi-year obscene Keynesian spending by the BOJ. The NIKK drops -2.4% overnight, 433 points, to 17427 (red dot). The year began at 17450 so the Nikkei Index gives up all the gains in 2015. The prognosticators predicting big gains in Japan this year are busy removing egg from their faces.

The red rising wedge pattern, overbot conditions and universal negative divergence with the indicators (red line) made for an easy top call for the Nikkei and the spank down occurs (red arrow). From the 21K top, a -10% correction is occurs at 18900 and price kept dropping. A -20% bear market begins under 16800. At 17427, the Nikkei is down -17% off the double tops in late June and early August. A death cross may occur during the next month (50-day MA down through the 200-day MA).

The green lines show positive divergence for the indicators except for the weak and bleak MACD line. Followers of Keystone know the drill by now. Price will bounce due to the possie d but the MACD line wants price to come back down after the bounce, and then with the MACD displaying positive divergence, a recovery rally will  be more substantive. The NIKK is very close to a near-term bottom after today's plunge lower.

The weekly chart is nasty with weak and bleak indicators so any bounce on the daily chart will likely give way to lower prices going forward for the weeks to come. Thus, if you are a very nimble trader, consider a long play on Japan stocks, say EWJ or DXJ, to play a bounce. Realize that after any bounce maybe for a day or three, price will come back down (due to the weak and bleak MACD line), so you either take the dough on the quick bounce or let it ride. Price will bottom again when the MACD line turns positively diverged. Then price should head higher for a more substantial rally on the daily chart. Do not get greedy when that runs higher say for a few days or a week or two since the weekly chart will reexert itself say a couple weeks out or so and likely turn the Nikkei lower again and to new lows as the year proceeds. So only Jack-be-Nimble should be trading the NIKK. 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.

Note Added 8:09 AM EST Wednesday morning, 9/9/15: The possie d wanted a bounce but did not expect a +7.7% move in the Nikkei Index overnight.

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