Nikkei average forecast

2024年4月21日日曜日

Outlook for the Nikkei average this week [21-April 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices were on a weekly downtrend as investor sentiment deteriorated due to concerns that the Fed would begin cutting interest rates later than expected by the market and fears of a retaliatory war between Israel and Iran.

Weekly volatility NY Dow: +0.01%, NASDAQ: -5.52%, S&P 500: -3.05%.

On the other hand, medium- to long-term risks include concerns about the prolonged conflict in Ukraine, energy costs, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. In addition, geopolitical risks in East Asia and the Middle East continue to require attention.

The difference in the yield spread between the Japanese and U.S. markets is 4.65 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 20.7 and the Nikkei 225's P/E ratio of 16.1, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.65 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 64.0, or if the Nikkei Index is around 147,420 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 110,360 yen,

From a fundamental perspective, the Japanese market can be said to be about 110,360 yen less attractive than the U.S. market. Last week, the weakness in the Japanese market diminished.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow's weekly chart was a negative line. The daily chart is above the 200-day line and below the clouds of the Ichimoku Kinko Hyo. The NASDAQ has a negative weekly line. The daily price is above the 200-day line and the Ichimoku cloud. This week, we will focus on whether or not the NY Dow can return above the 25-day line.

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.1%, an improvement of 0.3 percentage points from three months ago. Profit growth was +11.9%, an improvement of +3.4 percentage points from three months ago.

③ The U.S. long-term interest rate rose and the interest rate differential between the U.S. and Japan widened from 3.68 to 3.78, moving the dollar against the yen from the ¥152 level to the ¥154 level. The dollar index rose +0.10% for the week.

④ The OECD's nominal GDP growth rate for Japan and the U.S. in 2025 is expected to be +3.4% for Japan and +3.9% for the U.S., so the Japanese market is 0.5 percentage points inferior in this aspect.

⑤ The second week of April was likely overbought, the third week of April was likely oversold, and this week is expected to be oversold. Last week, of the five points, ① was bearish. ① ② ③ and ⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 3.9 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 1540 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 10.0 points (about 3950 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Japanese market turned overvalued relative to the U.S. market. The VIX, a measure of U.S. market volatility, rose to 17.3 for the week. The Nikkei VI declined to a weekly low of 19.97. The U.S. market is somewhat pessimistic and the Japanese market is somewhat pessimistic.

The Nikkei 225 is below the 9-day and the 25-day lines. This is a "red light" for the short-term trend.

The Nikkei 225 is in the clouds of the Ichimoku Chart. The Nikkei 225's divergence from the 200-day moving average is -1.0% and +7.4%. Since one factor is positive, a "yellow signal" is lit in the medium-term trend.

In the U.S. market, the NYDow is below the 9-day line and the 25-day line and above the 200-day line. It is below Ichimoku Chart cloud.
The NASDAQ is below the 9-day line and the 25-day line and above the 200-day line. It is in the Ichimoku Kinko's cloud.
This is a " red light" in the short term and a "yellow light" in the medium term.

[Outlook for this week]

Looking at the U.S. market from a fundamental perspective, concerns about a global economic slowdown due to the spread of the new coronavirus have receded, but risk factors include inflation and rising interest rates due to the Russia-Ukraine war and economic slowdown due to energy shortages and deteriorating political conditions in the EU, U.S.-China trade friction, financial market turmoil caused by the bursting of the Chinese real estate bubble and credit contraction, and geopolitical risks in the Middle East and East Asia.

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term down trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is down trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 153 to 155 yen.

In the U.S. markets this week, attention will be focused on first quarter GDP growth and PCE prices, personal income and consumer spending. In addition, durable goods orders, the S&P Global Manufacturing and Services PMIs, the Temporary Contract Home Sales Index and new home sales will be in focus. Earnings season will also peak. Internationally, manufacturing and services PMIs for Japan, the Eurozone, and the U.K. will be released. Interest rate decisions in Japan and China will also be closely watched.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 450 yen below the assumed line and the downside was about 980 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band -1σ on the upside (currently around 38630 yen) and the Bollinger Band -3σ on the downside (currently around 36790 yen).

This week, we need to keep a close eye on U.S. companies' quarterly earnings results and PCE price indexes for their impact on the expected timing of interest rate cuts this year. Once geopolitical risks in the Middle East settle down, both Japanese and U.S. markets are technically at oversold levels and are likely to search for a reversal.

2024年4月14日日曜日

Outlook for the Nikkei average this week [14-April 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indexes fell for the week as investor sentiment deteriorated on fears that the Fed would begin cutting interest rates later than the market had expected and on speculation of imminent Iranian retaliation against Israel.

Weekly volatility NY Dow: -2.37%, NASDAQ: -0.45%, S&P 500: -1.56%.

The difference in the yield spread between the Japanese and U.S. markets is 4.34 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.3 and the Nikkei 225's P/E ratio of 17.0, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.34 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 65.5, or if the Nikkei Index is around 151,960 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 112,440 yen,

From a fundamental perspective, the Japanese market can be said to be about 112,440 less attractive than the U.S. market. The weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

③ The U.S. long-term interest rate rose and the interest rate differential between the U.S. and Japan widened from 3.65 to 3.68, moving the U.S. dollar against the yen from the 151 yen level to the 153 yen level. The dollar index rose +1.66% for the week.

⑤ The first week of April was likely overbought, the second week of April was likely oversold, and this week is expected to be oversold. Last week, of the five points, ① was bearish. ① ② ③ and ⑤ are expected to have an impact.

[Technical viewpoint]

The Nikkei 225 is below the 9-day and the 25-day lines. This is a "red light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +19.7%. The divergence between the Nikkei 225 and the 200-day moving average was +14.9%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

In the U.S. market, the NYDow is below the 9-day line and the 25-day line and above the 200-day line. It is below Ichimoku Chart cloud.
The NASDAQ is below the 9-day line and the 25-day line and above the 200-day line. It is above the Ichimoku Kinko's cloud.
This is a " red light" in the short term and a "yellow light" in the medium term.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term down trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is down trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 152 to 154 yen.

This week in the U.S. markets, major companies such as Goldman Sachs, Blackstone, Netflix, and P&G will release their earnings results as the first quarter earnings season kicks off. Also in focus will be retail sales and speeches by Fed officials, followed by housing starts and existing home sales. Internationally, China's GDP growth, industrial production, retail sales, home prices, and fixed asset investment will be released, as well as the UK's inflation, unemployment, and retail sales numbers, and Japan's inflation rate.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 760 yen below the assumed line and the downside was about 230 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 39700 yen) on the upside and Bollinger Band -2σ (currently around 38390 yen) on the downside.

This week, we will need to closely monitor the impact of U.S. companies' quarterly earnings results on investors' expectations for the timing of interest rate cuts before the end of the year. With geopolitical risks in the Middle East on the rise, if U.S. long-term interest rates continue to rise, both Japanese and U.S. markets are likely to continue to see heavy upside.

2024年4月7日日曜日

Outlook for the Nikkei average this week [7-April 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indexes fell for the week, mainly due to the Fed governor's cautious stance on a rate cut by the end of the year and rising long-term interest rates.

Weekly change NY Dow: -2.27%, NASDAQ: -0.80%, S&P 500: -0.95%.

The difference in the yield spread between the Japanese and U.S. markets is 4.42 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.1 and the Nikkei 225's P/E ratio of 16.7, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.42 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 62.9, or if the Nikkei Index is around 147,380 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 108,390 yen,

From a fundamental perspective, the Japanese market can be said to be about 108,390 less attractive than the U.S. market. The weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow's weekly chart was a negative line. The daily chart is above the 200-day line and the clouds of the Ichimoku Kinko Hyo. The NASDAQ has a negative weekly line. The daily price is above the 200-day line and the Ichimoku cloud. This week, we will focus on whether or not the NY Dow can return above the 25-day line.

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.1%, an improvement of 0.2 percentage points from three months ago. Profit growth was +12.2%, an improvement of +3.2 percentage points from three months ago.

③ The U.S. long-term interest rate rose and the interest rate differential between the U.S. and Japan widened from 3.48 to 3.65. The U.S. dollar moved against the yen from the 150-yen level to the 151-yen level. The dollar index fell -0.24% for the week.

⑤ The fourth week of March was oversold, the first week of April was likely oversold, and this week is expected to be oversold. Of the five points last week, ① was bearish. ① ② ③ and ⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 1.9 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 740 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 6.1 points (about 2380 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Japanese market turned overvalued relative to the U.S. market. The VIX, a measure of U.S. market volatility, declined to a weekly low of 13.0. The Nikkei VI rose to 18.6 for the week. The U.S. market is optimistic and so is the Japanese market.

The Nikkei 225 is below the 9-day and the 25-day lines. This is a "red light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +19.9%. The divergence between the Nikkei 225 and the 200-day moving average was +13.9%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

In the U.S. market, the NYDow is below the 9-day line and the 25-day line and above the 200-day line. It is above Ichimoku Chart cloud.
The NASDAQ is below the 9-day line and above the 25-day line and the 200-day line. It is above the Ichimoku Kinko's cloud.
This is a " yellow light" in the short term and a "green light" in the medium term.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is no trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 150 to 151 yen.

In the U.S. markets this week, the focus will be on inflation and the FOMC minutes. Globally, the ECB's interest rate decision is scheduled in the Eurozone. In China, consumer and producer prices as well as trade data will be in focus. Other releases will include industrial production in Germany, GDP and industrial production in the U.K., and consumer confidence in Japan.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 390 yen below the assumed line and the downside was about 1,020 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 39790 yen) on the upside and Bollinger Band -2σ (currently around 38470 yen) on the downside.

This week, we will need to keep a close eye on the impact of the U.S. CPI on investors' expectations for the timing of a rate cut before the end of the year. With geopolitical risks in the Middle East on the rise, if U.S. long-term interest rates continue to rise, both Japanese and U.S. markets are likely to continue to see heavy upside.

2024年3月31日日曜日

Outlook for the Nikkei average this week [31-March 2024]

[Fundamental viewpoint]

Last week, the U.S. market continued to lack direction amid thin trading ahead of a three-day holiday weekend, but the NY Dow and S&P 500 reached new all-time highs, while stock indices were mixed for the week.

Weekly change NY Dow: +0.84%, NASDAQ: -0.30%, S&P 500: +0.39%.

The difference in the yield spread between the Japanese and U.S. markets is 4.20 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.6 and the Nikkei 225's P/E ratio of 17.1, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.20 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 60.4, or if the Nikkei Index is around 142,680 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 102,310 yen,

From a fundamental perspective, the Japanese market can be said to be about 102,310 less attractive than the U.S. market. The weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow's weekly chart was a positive line. The daily chart is above the 200-day line and the clouds of the Ichimoku Kinko Hyo. The NASDAQ has a negative weekly line. The daily price is above the 200-day line and the Ichimoku cloud. This week, we will focus on whether or not the NY Dow can keep above the 25-day line.

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.0%, an improvement of 0.2 percentage points from three months ago. Profit growth was +11.9%, an improvement of +2.8 percentage points from three months ago.

③ The U.S. long-term interest rate was unchanged and the interest rate differential between the U.S. and Japan widened from 3.47 to 3.48, with the dollar hovering around the 151-yen level. The dollar index rose -0.05% for the week.

⑤ The third week of March was likely overbought, the fourth week of March was likely oversold, and this week is expected to be overbought. Of the five points last week, ⑤was bearish. ① ② ③ and ⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 5.1 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 2060 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 7.8 points (about 3150 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Nikkei 225 is below the 9-day and above the 25-day lines. This is a "yellow light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +30.2%The divergence between the Nikkei 225 and the 200-day moving average was +18.5%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

In the U.S. market, the NYDow is above the 9-day line and the 25-day line and the 200-day line. It is above Ichimoku Chart cloud.
The NASDAQ is above the 9-day line and the 25-day line and the 200-day line. It is above the Ichimoku Kinko's cloud.
This is a " green light" in the short term and a "green light" in the medium term.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is no trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 150 to 152 yen.

In the U.S. markets this week, the most closely watched employment data will be the nonfarm payrolls and unemployment rate. Also of interest will be the JOLTS job openings, ISM manufacturing and services PMIs, manufacturing orders, and the trade balance. Globally, the Eurozone's March inflation rate, China's manufacturing and services PMIs, and Japan's Bank of Japan's Tankan will also be of interest.

Last week, the Nikkei 225 remained within the assumed range. The upper price was about 40 yen below the assumed line and the lower price was about 430 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 41090 yen) on the upside and the 25-day line (currently around 39710 yen) on the downside.

This week, we will need to keep a close eye on the impact of the employment report on investors' expectations for the timing of a rate cut before the end of the year. With the start of the new year, institutional investors are likely to move more easily, and both the U.S. and Japanese markets are expected to rally.

2024年3月24日日曜日

Outlook for the Nikkei average this week [24-March 2024]

[Fundamental viewpoint]

The FOMC's unchanged outlook for the level of future policy rates from the previous meeting provided buying relief, and stock indices rose for the week.

Weekly change NY Dow: +1.97%, NASDAQ: +2.85%, S&P 500: +2.29%.

The difference in the yield spread between the Japanese and U.S. markets is 4.11 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.6 and the Nikkei 225's P/E ratio of 17.3, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.11 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 60.1, or if the Nikkei Index is around 141,870 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 100,980 yen,

From a fundamental perspective, it can be said that the Japanese market is about 100,98 less attractive than the U.S. market. Last week, the weakness of the Japanese market diminished.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow's weekly chart was a positive line. The daily chart is above the 200-day line and the clouds of the Ichimoku Kinko Hyo. The NASDAQ has a positive weekly line. The daily price is above the 200-day line and the Ichimoku cloud. This week, we will focus on whether or not the NY Dow can keep above the 25-day line.

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.0%, an improvement of 0.1 percentage points from three months ago. Profit growth was +11.6%, an improvement of +2.67 percentage points from three months ago.

③ The U.S. long-term interest rate fell and the interest rate differential between Japan and the U.S. narrowed to 3.47 from 3.54, but the dollar moved against the yen in the range of ¥148 to ¥151. The dollar index rose +0.95% for the week.

⑤ The second week of March was likely oversold, the third week of March was likely overbought, and this week is expected to be oversold. Last week, of the five points, ① and ③ were bullish. This week,. ① ② ③ and ⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 6.5 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 2660 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 10.6 points (about 4330 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Japanese market turned overvalued relative to the U.S. market. The VIX, a measure of U.S. market volatility, declined to a weekly low of 13.1. The Nikkei VI declined to a weekly low of 18.5. The U.S. market is optimistic and so is the Japanese market.

The Nikkei 225 is above the 9-day and the 25-day lines. This is a "green light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +37.8%The divergence between the Nikkei 225 and the 200-day moving average was +20.8%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 150 to 152 yen.

The focus in the U.S. market this week will be on the PCE price index. In addition, speeches by Fed officials, including Chairman Powell, will be the focus of investor attention. Other key data will include durable goods orders, the Q4 GDP confirmation, the CB Consumer Confidence Index, and housing market indicators such as new home sales and pending home sales. Internationally, the focus will be on inflation in France and Italy. In Germany, the consumer confidence index, retail sales, and unemployment rate are of interest. In Japan, the Bank of Japan's Tankan, unemployment rate, industrial production, retail sales, and housing starts will be released.

Last week, the Nikkei 225 moved above its assumed range. The upside was about 1,040 yen above the assumed line and the downside was about 790 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 40800 yen) on the upside and the 25-day line (currently around 39300 yen) on the downside.

This week, we will need to keep a close eye on the impact of U.S. economic indicators to be released on long-term interest rates. Although there is a sense of caution about higher prices, if the FOMC meeting passes without incident and reassurance continues, there may still be room for both the U.S. and Japanese markets to move higher.

2024年3月17日日曜日

Outlook for the Nikkei average this week [17-March 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indexes fell for the week as higher consumer and producer price indexes in February weighed on long-term interest rates.

Weekly volatility NY Dow: -0.02, NASDAQ: -0.70%, S&P 500: -0.13%.

The difference in the yield spread between the Japanese and U.S. markets is 4.48 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.4 and the Nikkei 225's P/E ratio of 16.3, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.48 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 60.8, or if the Nikkei Index is around 144,130 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 105,420 yen,

From a fundamental perspective, the Japanese market can be said to be about 105,420 yen less attractive than the U.S. market. Weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.1%, an improvement of 0.2 percentage points from three months ago. Profit growth was +11.9%, an improvement of +2.6 percentage points from three months ago.

③ The U.S. long-term interest rate rose and the interest rate differential between the U.S. and Japan narrowed from 3.35 to 3.54, moving the U.S. dollar against the yen in the range of ¥146 to ¥149. The dollar index rose +0.69% for the week.

⑤ The first week of March was likely overbought, the second week of March was likely oversold, and this week is expected to be oversold. Of the five points last week, ① was bearish. ①②③⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 3.3 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 1280 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 6.5 points (about 2520 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Japanese market turned overvalued relative to the U.S. market. The VIX, a measure of U.S. market volatility, declined to a weekly low of 14.4. The Nikkei VI declined to a weekly low of 20.3. The U.S. market is optimistic and the Japanese market is taking a break.

The Nikkei 225 is below the 9-day and the 25-day lines. This is a "red light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +22.8%The divergence between the Nikkei 225 and the 200-day moving average was +15.0%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

In the U.S. market, the NYDow is below the 9-day line and the 25-day line and above the 200-day line. It is above Ichimoku Chart cloud.
The NASDAQ is below the 9-day line and the 25-day line and above the 200-day line. It is above the Ichimoku Kinko's cloud.
This is a " red light" in the short term and a "green light" in the medium term.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 148 to 150 yen.

This week in the U.S. markets, the FOMC will release its economic forecasts and future interest rate expectations. In addition, manufacturing and services PMIs, building permits, housing starts, and existing home sales will be released. Internationally, interest rate decisions in Japan, the U.K., and Australia will be of interest. Also of interest will be Japan's inflation rate and manufacturing and services PMIs for Japan, the Eurozone, and the U.K., as well as China's industrial production, retail sales, unemployment rate, fixed asset investment, and prime rate.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 470 yen below the assumed line and the downside was about 310 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ on the upside (currently around 39690 yen) and the Bollinger Band -1σ on the downside (currently around 37950 yen).

This week is likely to be influenced by monetary policy in Japan and the U.S. If the trend of rising U.S. long-term interest rates continues, the Nikkei 225 is likely to continue to have difficulty moving significantly due to the weak yen and weak U.S. equities.

2024年3月10日日曜日

Outlook for the Nikkei average this week [10-March 2024]

[Fundamental viewpoint]

In the U.S. market last week, semiconductor stocks such as NVIDIA, which had been rising notably, saw widespread profit-taking, and stock indices fell for the week.

Weekly volatility NY Dow: -0.93, NASDAQ: -1.17%, S&P 500: -0.26%.

The difference in the yield spread between the Japanese and U.S. markets is 4.04 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2025 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 21.1 and the Nikkei 225's P/E ratio of 16.9, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.04 points larger than the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the current year's forecast PER of the Nikkei Index stocks is around 52.9, or if the Nikkei Index is around 124,610 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 84,920 yen,

From a fundamental perspective, the Japanese market can be said to be about 84,920 yen less attractive than the U.S. market. Weakness in the Japanese market diminished last week.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

① Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2023 GDP estimate (now +3.5%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the announcement of quarterly financial results, the forecasted ROE of the Nikkei 225 indexes came in at +9.0%, an improvement of 0.2 percentage points from three months ago. Profit growth was +11.5%, an improvement of +3.1 percentage points from three months ago.

③ The U.S. long-term interest rate fell and the interest rate differential between the U.S. and Japan narrowed from 3.58 to 3.35, moving the U.S. dollar against the yen in the range of ¥150 to ¥146. The dollar index fell -1.10% for the week.

⑤ The fourth week of February was likely overbought, the first week of March was likely oversold, and this week is expected to be oversold. Of the five points last week, ① and ③ were bearish. ①②③⑤ are expected to have an impact.

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 5.6 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 2220 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 9.7 points (about 3850 yen in terms of the Nikkei average) overvalued in the medium to long term.

The Japanese market turned overvalued relative to the U.S. market. The VIX, a measure of U.S. market volatility, declined to a weekly low of 13.1. The Nikkei VI rose to 20.7 for the week. The U.S. market is optimistic and the Japanese market is quite optimistic.

The Nikkei 225 is above the 9-day and the 25-day lines. This is a "green light" for the short-term trend.

The Nikkei 225 is above chimoku Kinko Chart's cloud, and the Nikkei 225's total divergence is +34.1%The divergence between the Nikkei 225 and the 200-day moving average was +18.6%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

[Outlook for this week]

Recent LIBOR rates have been on the rise, and we continue to be wary of a resurgence of financial instability.

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

Analyzing the foreign exchange market, the yen is at the 150-yen level for the first time since November 2023. This week, the yen is expected to be in the range of 147 to 145 yen.

This week, the U.S. market will focus on the inflation rate, along with retail sales, producer inflation, the University of Michigan consumer sentiment index, and industrial production. Internationally, industrial production in the U.K. and the Eurozone and India, China's auto sales and home price indexes will all be indicators of the state of the global economy.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 160 yen below the assumed line and the downside was about 120 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around 39670 yen) on the upside and the 25-day line (currently around 38300 yen) on the downside.

This week, the Nikkei 225 is likely to be affected by the U.S. inflation rate in February, but is likely to weaken as U.S. long-term interest rates continue to decline.

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