Nikkei Looks Ugly, Already Below Long-Term Support

I was going to post the chart for Shanghai Composite, which sits right on the support (may be breaking as of now today), then I found a chart that's worse: Japan's Nikkei.

3-year support was around 9,000, or about 50% Fib retracement. It's breached, and the effort to regain that support line hasn't gone anywhere. Now on the weekly chart, it is forming a bear flag.

The first target would be the March low of 8,227, then the full retracement back to October 2008 low of 6,994.

Nikkei and Dow, Since 1984

Japan's Nikkei must be the saddest stock index in the world. At least so it seems to me.

Nikkei is again (third time) lower than the level in 1984, and that's 25 years ago. "A lost decade"? Here we may be potentially talking about "lost three decades", and possibly hoping that it will stop at "three decades".

Japan's Nikkei Looks Sick

When Dow, All Ordinary, Hang Seng, BSE, just about every major index in the world jumped after the full moon in early September, Nikkei didn't join the party. It ended the month down. After the sharp correction worldwide in the second half of October, the indices are off to the races again after November full moon. Except Nikkei.


According to Bloomberg, currency traders are increasingly bearish on Japanese yen and betting against it, predicting 10% or more fall from the current level (around 90 yen/dollar). The new government (Democratic Party of Japan) is still learning its way in and around the system, but more government spending and falling tax revenue with a shrinking population doesn't augur well for their misguided efforts.

FXY is the Japanese yen ETF. EWJ is the ETF that tracks stocks on Tokyo Stock Exchange. You can short the ETFs, or buy put options on them if you share the bearish sentiment about the world's second largest economy.