NIKK Tokyo Nikkei Weekly and Daily Charts Overbot Rising Wedges Negative Divegence

Everybody and his bro has ran into the Japanese stock market this year. The BOJ easing trains trader's to become junkies and buy the Nikkei with blinders on, just like trader's buying the U.S. equity markets due to the Fed's crack cocaine easy money. The Nikkei moves from 8500 to 14K in less than six months, 5500 points, +65%. Wow.  It is amazing how high something can become when main-lining the drugs, in this case easy money. The brown bars show the move from 10500 to 14K this year alone, a +35% increase for 2013. This is not due to improved economic conditions; it is purely due to the BOJ easing and weakening the yen.  The Japanese banks, manufacturer's and auto companies are all benefiting the most. The easy money is floating overseas pumping the U.S. equity markets higher and also pumping the European bond markets which is helping create the lower yields in that neck of the woods.

The BOJ meeting wraps up this morning and Japan says the money printing presses will run full steam ahead, however, there is no turning up of the printing presses, and trader's like junkies, now need more and more stimulus to keep moving equities higher, so the news actually causes the yen to strengthen this morning. The dollar/yen drops to 98.60 after printing well above 99 the last few days. Hence, the U.S. futures this morning are lower; the S&P's down about 4 or 5. If the dollar/yen drifts higher to 98.70, 98.80 and higher, the futures will move higher and the equity markets will move higher today. If the dollar/yen drops further, 98.50, 98.40 and lower, the broad indexes will sell off today. The Nikkei weekly chart shows the inverted H&S pattern with the blue lines; head at 8100, neck line at 10300, so target is 12500, easily achieved. Note the gap (green circle) that was filled after two years time.  If price would have hopped from 10.0K to 10.5K, that would have been an island reversal pattern but instead, price simply crept higher filling the gap from 2011. The large up candle in March shows you where BOJ made their voice loud and clear that they will start printing money like madmen. This sends the NIKK vertical.

The weekly chart is negatively diverged (red lines) except for the MACD line but that is in such nose-bleed territory it cannot go any higher. Ditto on the daily chart negatively diverged across all indicators. This is a price top right now fo rthe Nikkei.  When both the weekly and daily charts agree with negative divergence, it is an ominous combo.  This is interesting since the charts hint that the BOJ easing is already running out of gas.  The Fed pumped the equity markets January and February, the BOJ supplied the supercharger March and April. Perhaps the money bazooka's are starting to spit blanks. The Nikkei dropping would be in concert with the yen strengthening, dollar/yen dropping and U.S. equities dropping.  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.