Outlook for the Nikkei average this week [25-December 2022]

 [Present state recognition of fundamental]

In the US market last week, amid deep-rooted concerns that continued interest rate hikes by the Fed and ECB would further worsen the economy, there were some signs of a self-sustaining rebound, and the stock indices showed mixed movements during the week.

Weekly change rate NY Dow: +0.86% NASAQ: -1.94% S&P500: -0.20%.

                                       

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to rising interest rates, and concerns about the bursting of the real estate bubble and a 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 that the Japanese market is 4.81 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 17.4 and the Nikkei 225's expected PER of 12.2 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.81 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 29.4 or if the Nikkei 225 is about 63250 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 37020 yen in the medium to long term.

 

Fundamentally, the Japanese market is 37020 yen less attractive than the US market. Last week, 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, the NYDow weekly trend was positive. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line and the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can move above the 25-day average line.

②    As a result of the announcement of quarterly financial results, the ROE forecast for Nikkei 225 stocks is 9.0%. It is 0.1 point worse than 3 months ago. In addition, the profit growth rate was +6.3%, an improvement of 2.2 percentage points compared to three months ago.

③    Long-term interest rates in the United States rose, and although the interest rate differential between Japan and the United States widened from 3.24 to 3.38, the dollar/yen exchange rate moved in the direction of yen appreciation within the range of 137 yen to 130 yen. The dollar index fell -0.49% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.51% for Japan and +3.54% for the U.S., so the Japanese market is 1.03 percentage points worse in this aspect.

⑤    The second week of December was net selling. It is likely that the 3rd week of December was a net sell, and a net sell is expected this week. out of the five points, ③ was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 7.3 points (about 1920 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 6.1 points (about 1600 yen when converted to the Nikkei 225) lower in the medium to long term.

 

The strength of the Japanese market relative to the US market weakened during the week. The VIX, a measure of US market volatility, fell to 20.9 in a week. Nikkei VI rose to 20.2 in a week. Both indices are above 20, the borderline between optimism and pessimism.

 

The Nikkei is below the 9th and 25th lines. A short-term trend has a "red light".

The Nikkei average is below the clouds in the Ichimoku Kinko Hyo. The overall deviation rate was -13.3%, and the deviation rate from the 200-day moving average line was -3.7%. The medium-term trend has a "red light" as the 3 factors are positive.

 

In the US market, the NYDow is above the 200-day line but below the 9-day and 25-day lines. It is above the clouds of the Ichimoku Kinko Hyo. NASDAQ is below the 9th, 25th, and 200th lines. It is below the clouds of the Ichimoku Kinko Hyo.

It 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 no trend and a short-term down trend. The Japanese market is in a medium-term down trend and is in a short-term down trend.

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 134-130 yen range.

 

This week marks the final week of 2022, but with few significant economic announcements, the focus shifts to what the stock market will do next year. Many investors are on vacation and hoping to bring some rest to the market. In the U.S., housing data and his PMI readings for several regions are headlined. Japan will also release retail sales, industrial production and unemployment rates, while South Korea, Spain and Russia will focus on inflation rates.

 

Last week's Nikkei average fell below the expected range. The upper price was about 180 yen below the expected line, and the lower price was about 380 yen below the expected line. The expected range of the Nikkei average this week is that the upper value is Bollinger band -1σ (currently around 27080 yen) and the lower value is expected to move between Bollinger band -3σ (currently around 25880 yen).

 

Last week US volatility rose for the week and stock indices were mixed. This week's Nikkei average is likely to move across the Bollinger band -2σ.

Outlook for the Nikkei average this week [18-December 2022]

 [Present state recognition of fundamental]

In the US market last week, there was deep-rooted concern that the Fed and ECB's decision to continue raising interest rates at their monetary policy meetings would lead to a further deterioration in the economy, and the stock index fell during the week.

Weekly fluctuation rate NY Dow: -1.66% NASAQ: -2.72% S&P500: -2.08%.

                                       

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to rising interest rates, and concerns about the bursting of the real estate bubble and a 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 that the Japanese market is 4.59 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 17.8 and the Nikkei 225's expected PER of 12.5 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.59 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 29.4 or if the Nikkei 225 is about 64740 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 37210 yen in the medium to long term.

 

Fundamentally, the Japanese market is 37210 yen less attractive than the US market. Last week, 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, the NYDow weekly trend was negative. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can move above the 25-day average line.

②    As a result of the announcement of quarterly financial results, the ROE forecast for Nikkei 225 stocks is 9.1%. It is 0.1 point worse than 3 months ago. In addition, the profit growth rate was +6.5%, an improvement of 2.4 percentage points compared to three months ago.

③    Long-term interest rates in the United States declined, the interest rate differential between Japan and the United States narrowed from 3.34 to 3.24, and the yen depreciated between 134 yen and 136 yen against the dollar. The dollar index fell -0.09% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.51% for Japan and +3.54% for the U.S., so the Japanese market is 1.03 percentage points worse in this aspect.

⑤    The first week of December was net selling. The 2nd week of December was likely a net sell, and we expect a net sell this week. Last week, out of the five points, ① was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 8.7 points (about 2390 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 0.4 points (about 110 yen when converted to the Nikkei 225) lower in the medium to long term.

 

The strength of the Japanese market relative to the US market declined during the week. The VIX, a measure of US market volatility, fell slightly over the week to 22.6. It is above 20, which marks the borderline between optimistic and pessimistic. The Nikkei VI fell to 17.76 for the week.

 

The Nikkei is below the 9th and 25th lines. A short-term trend has a "red light".

The Nikkei average is above the clouds in the Ichimoku Kinko Hyo. The overall deviation rate was -0.6%, and the deviation rate from the 200-day moving average line was +1.1%. The medium-term trend has a "yellow light" as the two factors are positive.

 

In the US market, the NYDow is above the 200-day line but below the 9-day and 25-day lines. It is above the clouds of the Ichimoku Kinko Hyo. NASDAQ is below the 9th, 25th, and 200th lines. It is in the clouds of the Ichimoku Kinko Hyo.

It 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 136-139 yen range.

 

This week will be a week of important announcements in the US including the PCE Price Index, Personal Income and Expenditure, University of Michigan Consumer Sentiment and Durable Goods Orders. Elsewhere, Japan and Canada will release inflation data and the Bank of Japan will hold a monetary policy meeting. Investors will also look to his Ifo Business Confidence Index for Germany, as well as Consumer Confidence Indexes for the Eurozone and the United Kingdom, and Germany.

 

Last week's Nikkei average fell below the expected range. The upper price exceeded the expected line by about 20 yen, and the lower price was about 280 yen below the expected line. The expected range of the Nikkei average this week is that the upper value is Bollinger band -1σ (currently around 27770 yen) and the lower value is expected to move between Bollinger band -3σ (currently around 27360 yen).

 

Equity indices fell while US volatility leveled off for the week last week. This week's Nikkei average is likely to move across the Bollinger band -2σ.

Outlook for the Nikkei average this week [11-December 2022]

 [Present state recognition of fundamental]

In the US market last week, with the release of the consumer price index and the FOMC results, there is a growing view that inflation will encourage the Fed to continue raising interest rates, and the stock index fell for the week.

Weekly fluctuation rate NY Dow: -2.77% NASAQ: -3.99% S&P500: -3.37%.

                                       

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to rising interest rates, and concerns about the bursting of the real estate bubble and a 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 that the Japanese market is 4.63 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 18.0 and the Nikkei 225's expected PER of 12.7 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.63 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 30.7 or if the Nikkei 225 is about 67480 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 39580 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market can be said to be less attractive than the U.S. market by 39580 yen. Weakness in the Japanese market narrowed somewhat 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, the NYDow weekly trend was negative. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will be watching to see if the NASDAQ can move above the Ichimoku Chart cloud.

②    As a result of the announcement of quarterly financial results, the ROE forecast for Nikkei 225 stocks is 9.0%. It is 0.1 point worse than 3 months ago. In addition, the profit growth rate was +6.6%, an improvement of 1.4 percentage points compared to three months ago.

③    Long-term interest rates in the United States rose, the interest rate differential between Japan and the United States widened from 3.25 to 3.34, and the dollar/yen exchange rate moved in the direction of yen depreciation within the range of 134 yen to 137 yen. The Dollar Index gained +0.41% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.51% for Japan and +3.54% for the U.S., so the Japanese market is 1.03 percentage points worse in this aspect.

⑤    The November 5 week was oversold; the December 1 week was likely oversold; this week is expected to be overbought. Of the five points last week, ③ was bearish.   ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 5.1 points (about 1420 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 0.7 points (about 200 yen when converted to the Nikkei 225) lower in the medium to long term.

 

The strength of the Japanese market relative to the U.S. market decreased during the week. The VIX, a measure of U.S. market volatility, rose for the week to 22.8. It is above 20, which marks the borderline between optimistic and pessimistic. The Nikkei VI was 18.04, down for the week.

 

The Nikkei 225 is above the 9-day line but below the 25-day line. The short-term trend is now showing a "yellow signal.

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +3.7%. The divergence from the 200-day moving average is +2.5%. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above the 200-day line but below the 9-day and 25-day lines. It is above the clouds of the Ichimoku Kinko Hyo. NASDAQ is below the 9-day, 25-day and 200-day lines. It is in the clouds of the Ichimoku Kinko Hyo.

It is a "yellow light" in the short term, and a "yellow light" is lit 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 137-134 yen range.

 

This week in the US, all eyes will be on November's CPI, FOMC results and Fed Chairman Jerome Powell's press conference. Also to watch will be the UK monetary policy announcement, as well as the ECB's regular Governing Council meeting and Lagarde's press conference. In addition, PMIs for the US, UK, Eurozone and Australia will be released. In addition, in the United States, the New York Fed Business Index for December, retail sales for November, the Philadelphia Fed Business Index for December, and industrial production for November will give us an idea of the state of the economy.

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 220 yen below the assumed line and the downside was about 200 yen below the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ on the upside (currently around 28170 yen) and the Bollinger Band -1σ on the downside (currently around 27630 yen).

Volatility in the U.S. declined during the week last week and stock indices rose. The Nikkei 225 is likely to move between the 25-day lines this week.

Outlook for the Nikkei average this week [4-December 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, stock indices rose for the week as speculation of a reduction in interest rates at the December FOMC meeting strengthened.

Weekly change NY Dow: +0.24% NASAQ: +2.09% S&P 500: +1.13%.

                                       

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to rising interest rates, and concerns about the bursting of the real estate bubble and a 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 that the Japanese market is 4.69 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 18.4 and the Nikkei 225's expected PER of 12.6 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.69 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 31.0 or if the Nikkei 225 is about 68130 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 40350 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market can be said to be less attractive than the U.S. market by 39130 yen. 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, the NYDow weekly trend was positive. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will be watching to see if the NASDAQ can move above the Ichimoku Chart cloud.

②    As a result of the announcement of the quarterly financial results, the estimated ROE of the Nikkei225 index was 9.0%, an improvement of 0.1 percentage points from three months ago. The profit growth rate was +6.2%, an improvement of 2.2 percentage points from three months ago.

③    U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 3.43 to 3.25, moving the dollar against the yen in the range of ¥139 to ¥133. The dollar index fell -1.47% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.51% for Japan and +3.54% for the U.S., so the Japanese market is 1.03 percentage points worse in this aspect.

⑤    The November 4 week was overbought; the November 5 week was likely oversold and is expected to be oversold this week. Of the five points last week, ③ was bearish.   ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 6.4 points (about 1780 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 4.1 points (about 1140 yen when converted to the Nikkei 225) lower in the medium to long term.

 

The strength of the Japanese market relative to the U.S. market decreased during the week. The VIX, a measure of U.S. market volatility, fell for the week to 19.1. It is below the optimistic sentiment mark of 20. The Nikkei VI rose for the week to 19.9.

 

The Nikkei 225 is below the 9-day line and the 25-day line. The short-term trend is now showing a "red signal.

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +2.3%. The divergence from the 200-day moving average is +2.1%. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the U.S. market, the NYDow is above the 9-day, 25-day, and 200-day lines. It is above the clouds on the equilibrium chart.NASDAQ is above the 9-day and 25-day lines but below the 200-day line. It is in the clouds of the equilibrium chart. This is a "green 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 135-131 yen range.

 

In the U.S. this week, attention will be focused on the ISM Non-Manufacturing PMI, the University of Michigan Consumer Confidence Index, and PPI data. Also of interest will be interest rate decisions in Australia, Canada, and India, as well as inflation rates in China, Russia, the Netherlands, and Mexico. Other data will include German manufacturing orders and trade statistics from China, Canada, and the U.S., which will provide an idea of the state of global demand..

 

Last week, the Nikkei 225 fell below its assumed range. The upper price was about 90 yen below the assumed line and the lower price was about 180 yen below the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ on the upside (currently around 28180 yen) and the Bollinger Band -1σ on the downside (currently around 27510 yen).

 

Volatility in the U.S. declined during the week last week and stock indices rose. The Nikkei 225 is likely to move between the 25-day lines this week.

Outlook for the Nikkei average this week [27-November 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, stock indices rose for the week as expectations of a slowdown in the pace of Fed rate hikes supported the market.

Weekly change NY Dow:+1.78% NASAQ:+0.72% S&P 500:+1.53%.

                                       

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to rising interest rates, and concerns about the bursting of the real estate bubble and a 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 that the Japanese market is 4.47 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 17.8 and the Nikkei 225's expected PER of 13.0 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.47 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 30.9 or if the Nikkei 225 is about 67410 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 39130 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market can be said to be less attractive than the U.S. market by 39130 yen. 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, the NYDow weekly trend was positive. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will be watching to see if the NASDAQ can move above the Ichimoku Chart cloud.

②    As a result of the announcement of the quarterly financial results, the estimated ROE of the Nikkei225 index was 9.1%, an improvement of 0.1 percentage points from three months ago. The profit growth rate was +6.1%, an improvement of 2.5 percentage points from three months ago.

③    U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 3.59 to 3.43, moving the dollar against the yen in the range of ¥142 to ¥138. The dollar index fell -0.85% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.51% for Japan and +3.54% for the U.S., so the Japanese market is 1.03 percentage points worse in this aspect.

⑤    The November 3 week was oversold; the November 4 week was likely overbought, and this week is expected to be oversold. Of the five points last week, ① was bullish.   ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 10.7 points (about 3030 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 1.9 points (about 540 yen when converted to the Nikkei 225) lower in the medium to long term.

 

During the week, the strength of the Japanese market relative to the U.S. market decreased. The VIX, which indicates the volatility of the U.S. market, declined to 20.5, below the 25 level that indicates investor anxiety. Nikkei VI dropped to 17.5.

 

The Nikkei 225 is above the 9-day line and the 25-day line. The short-term trend is now showing a "green signal.

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +8.5%. The divergence from the 200-day moving average is +4.0%. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the U.S. market, the NYDow is above the 9-day, 25-day, and 200-day lines. It is above the clouds on the equilibrium chart.NASDAQ is above the 9-day and 25-day lines but below the 200-day line. It is in the clouds of the equilibrium chart. This is a "green 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 140-137 yen range.

 

In the U.S. this week, the focus will be on employment data, speeches by Fed officials, ISM manufacturing PMI, CB consumer confidence index, and personal income and spending. Attention will also be focused on inflation releases from the Eurozone, Germany, France, Italy, and South Korea. In addition, manufacturing PMIs from China, India, South Korea, and Australia will be released.

 

Last week, the Nikkei 225 remained mostly within the assumed range. The upper price was about 60 yen above the assumed line and the lower price was about 330 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 28510 yen) on the upside and the 25-day line (currently around 27660 yen) on the downside.

 

Volatility in the U.S. declined during the week last week and stock indices rose. This week, the Nikkei 225 is likely to move between Bollinger Bands +1σ.

Outlook for the Nikkei average this week [20-November 2022]

 [Present state recognition of fundamental]

In the U.S. market last week, stocks fell for the week, as profit-taking slightly outweighed gains in stocks with good earnings.

Weekly change NY Dow: -0.01% NASAQ: -1.57% S&P 500: -0.69%.

                                       

On the other hand, medium- to long-term risks include concerns about the prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to prolonged supply chain disruptions, and concerns about the bursting of the real estate bubble and economic slowdown in China. This also raises concerns about the advent of stagflation. Furthermore, we need to continue to pay attention to geopolitical risks in East Asia and the Middle East.

 

The difference in the yield spread between the Japanese and U.S. markets is that the Japanese market is 4.55 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 17.8 and the Nikkei 225's expected PER of 12.9 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.55 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 29.6 or if the Nikkei 225 is about 65410 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 37510 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market can be said to be less attractive than the U.S. market by 37510 yen. 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 the NYDow was in the crosshairs for the week. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will be watching to see if the NASDAQ can move above the Ichimoku Chart cloud.

②    As a result of the announcement of the quarterly financial results, the estimated ROE of the Nikkei225 index was 9.1%, an improvement of 0.1 percentage points from three months ago. The profit growth rate was +6.9%, an improvement of 2.4 percentage points from three months ago.

③    U.S. long-term interest rates rose and the interest rate differential between the U.S. and Japan widened from 3.58 to 3.59, moving the dollar against the yen in the range of ¥137 to ¥140. The dollar index rose +0.52% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2023 is expected to be +3.54% for Japan and +4.88% for the U.S., so the Japanese market is 1.34 percentage points inferior in this aspect.

⑤    The November 2 week was overbought; the November 3 week was likely overbought and is expected to be overbought this week. Of the five points last week, ① was bearish.   ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 10.5 points (about 2930 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 1.3 points (about 360 yen when converted to the Nikkei 225) lower in the medium to long term.

 

During the week, the strength of the Japanese market relative to the U.S. market decreased. The VIX, which indicates the volatility of the U.S. market, declined to 22.5, below the 25 level that indicates investor anxiety. Nikkei VI dropped to 18.2

 

The Nikkei 225 is below the 9-day line but above the 25-day line. The short-term trend is now showing a "yellow signal.

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +5.2%. The divergence from the 200-day moving average is +2.7%. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the U.S. market, the NYDow is above the 9-day, 25-day, and 200-day lines. It is above the clouds on the equilibrium chart.NASDAQ is above the 9-day and 25-day lines but below the 200-day line. It is in the clouds of the equilibrium chart. This is a "green 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 140-137 yen range.

 

This week in the U.S., we are closely watching the release of the FOMC minutes, the University of Michigan consumer confidence index, durable goods orders, and new home sales. In addition, November PMIs from the U.S., Japan, Germany, France, Australia, and other countries will be closely watched. In addition, central banks in China, South Korea, Turkey, and other countries are scheduled to make monetary policy decisions.

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 400 yen below the assumed line and the downside was about 100 yen below the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 28280 yen) on the upside and the 25-day line (currently around 27640 yen) on the downside.

 

Volatility in the U.S. rose during the week last week, while equity indices fell. This week, the Nikkei 225 is likely to move between Bollinger Bands +1σ.

 

Outlook for the Nikkei average this week [13-November 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, stock indices rose on the week as the growth in the U.S. CPI for October came in below market expectations, raising awareness that inflation has peaked out and the Fed is expected to ease off on interest rate hikes.

Weekly Change NY Dow:+4.15% NASAQ:+8.10% S&P 500:+5.90%.

                                       

On the other hand, medium- to long-term risks include concerns about the prolonged conflict in Ukraine, energy costs, concerns about a slowdown in the global economy due to prolonged supply chain disruptions, and concerns about the bursting of the real estate bubble and economic slowdown in China. This also raises concerns about the advent of stagflation. Furthermore, we need to continue to pay attention to geopolitical risks in East Asia and the Middle East.

 

The difference in the yield spread between the Japanese and U.S. markets is that the Japanese market is 4.38 points cheaper than the U.S. market, considering the announced OECD nominal GDP forecast for 2023. The reason for the undervaluation is the difference between the S&P 500's PER of 17.7 and the Nikkei 225's expected PER of 12.9 and the current fiscal year, as well as the difference in interest rates and GDP growth between the U.S. and Japan.

This means that if the GDP growth rate difference between Japan and the U.S. in 2021 expands by another 4.38 percentage points compared to the OECD forecast (Japan is revised downward or the U.S. is revised upward), or if the PER of the Nikkei 225 stocks for the current fiscal year is about 29.4 or if the Nikkei 225 is about 64620 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 36360 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market can be said to be less attractive than the U.S. market by 36360 yen. Weakness in the Japanese market narrowed 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, the NY Dow weekly trend was positive. The daily footstep is above the 200-day line and the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line but in the clouds of the equilibrium chart. This week, we will focus on whether or not the NASDAQ can move above the 200-day line.

②    As a result of the announcement of the quarterly financial results, the estimated ROE of the Nikkei225 index was 9.2%, an improvement of 0.1 percentage points from three months ago. The profit growth rate was +6.9%, an improvement of 2.4 percentage points from three months ago.

③    U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 3.92 to 3.58, moving the dollar against the yen in the range of ¥147 to ¥138. The dollar index fell -3.95% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2023 is expected to be +3.54% for Japan and +4.88% for the U.S., so the Japanese market is 1.34 percentage points inferior in this aspect.

⑤    The first week of November was overbought; the second week of November was likely overbought and is expected to be overbought this week. Last week, of the five points, ① and ⑤ were bullish and ③ was bearish.   ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in the 200-day divergence rate from the NASDAQ is 11.0 points (about 3110 yen when calculated for the Nikkei 225) higher in the medium to long term. On the other hand, the difference in the 200-day divergence from the NYDow is 0.2 points (about 60 yen when converted to the Nikkei 225) higher in the medium to long term.

 

During the week, the strength of the Japanese market relative to the U.S. market decreased. The VIX, which indicates the volatility of the U.S. market, declined to 22.5, below the 25 level that indicates investor anxiety. The Nikkei VI fell to 20.3.

 

The Nikkei 225 is above the Ichimoku Kinko Chart. The Nikkei 225 is now above the Ichimoku Kinko's Kumo (equilibrium) cloud. The Nikkei 225's divergence from the 200-day moving average is -0.5%, a smaller negative divergence than last week. The divergence from the 200-day moving average is +10.2%, expanding the positive margin. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the U.S. market, the NYDow is above the 9-day, 25-day, and 200-day lines. NASDAQ is above the 9-day and 25-day lines but below the 200-day line. The NASDAQ is above the 9- and 25-day lines but below the 200-day line.

This is a "green 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.

 

On the other hand, a positive factor is the maintenance of the Bank of Japan's monetary easing policy.

 

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

 

Analyzing the foreign exchange market, the yen has been trending lower since early 2021, but has turned stronger since November. This week, the yen is expected to be in the 137-140 yen range.

 

Retail sales, producer prices, and housing data will be among the most important economic indicators to be released in the U.S. this week. Investors will also be watching for earnings reports from major retailers and the state of the crypto market after FTX, a major exchange, filed for bankruptcy. Other areas of interest will include inflation rates in Japan, the U.K., and Canada, as well as the U.K.'s proposed budget. Also to be released will be data on German business confidence, Japan's third quarter GDP growth, China's industrial production, and retail sales.

 

Last week, the Nikkei 225 moved above its assumed range. The upper price was about 180 yen above the assumed line and the lower price was about 190 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +3σ (currently around 28610 yen) on the upside and Bollinger Band +1σ (currently around 26770 yen) on the downside.

 

Volatility in the U.S. declined during the week last week and stock indices rose sharply. This week, the Nikkei 225 is likely to move between the rising Bollinger Band +2σ.