Japan stock market — ready to rock and (sushi) roll

 

If you think Japan is over done to the upside, then short it — and see how that works out for you

 

The Japanese stock market could be poised for another major advance, matching the bull trend from November 2012 through May 2013.

On December 16, 2012 I posted a blog alerting readers to a new bull market in the Japanese stock market. At the time the Topix had just completed a massive 5+ month symmetrical triangle. See post here.

The Topix then advanced 60% before topping in May of this year.

On October 29, 2013 I posted another blog commenting on the bullish bias of the congestion zone that began in May. I suggested that the then 5-month symmetrical triangle (similar to the 2012 bottom) would likely be resolved to the upside. See blog post here.

The advance in the U.S. Dollar-denominated Nikkei Dow this week has completed a 6-month coil pattern on the daily graph. I prefer the US$ denominated Nikkei to the Yen Nikkei or Topix because it will benefit from a weak Yen (if the Yen weakens). This could be a significant breakout. The target of this coil ranges from 1700 to 1785, depending upon the point of the coil used to determine a price objective. [Note: Different data sources place the decimal point differently in the various Japanese stock indexes.]

 11.15_NKD_weekly

There is another way to determine an upside price target. If the advance currently developing equals the advance from November 2012 through May 2013, then the target becomes 2220.

 11.15_NKD_daily

I am including one more chart to provide historical perspective to the Japanese stock market. Many short-term traders believe the Nikkei is grossly overbought. Yet, the chart below (on a semi-long basis) shows that the Japanese market is barely off its lows, with substantial upside room.

NKYvsSPX

$NKD_F, $NK, $NKX, $EWJ

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