Outlook for the Nikkei average this week [24-December 2023]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices rose for the week as speculation that the Fed will cut interest rates in 2024 continued to support the market.

Weekly change NY Dow: +0.22% NASDAQ: +1.21% S&P 500: +0.75%.

                                                                                                 

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 4.99 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 14.5, 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 4.99 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 120,710 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 87,540yen,

 

From a fundamental perspective, the Japanese market can be said to be about 87.540yen 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

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 +8.8%, an improvement of 0.2 percentage points from three months ago. Profit growth was +8.4%, an improvement of +6.1 percentage points from three months ago.

③    Although U.S. long-term interest rates declined, the interest rate differential between the U.S. and Japan widened to 3.29 from 3.22, and the dollar moved toward a weaker yen in the range of ¥141 to ¥144. The dollar index fell -0.86% 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 December was overbought, the third week of December was likely overbought, and this week is expected to be overbought. Last week, of the five points, ① was bullish and ③ was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 6.6 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 2190 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 3.5 points (about 1160 yen in terms of the Nikkei average) undervalued in the medium to long term.

 

The Japanese market's overvaluation relative to the New York Dow weakened during the week. The VIX, a measure of U.S. market volatility, rose to 13.0 for the week. The Nikkei VI declined to a weekly low of 16.8. Market sentiment is optimistic in both the U.S. and Japanese markets.

 

The Nikkei 225 is above the 9-day and below 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 +7.8%The divergence between the Nikkei 225 and the 200-day moving average was +5.7%. 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been turning toward appreciation since November 2023. This week, we expect the yen to be in the 140-143 yen range.

 

This week in the U.S. market is expected to be a materially less material week after the Christmas vacation. In the housing sector, the Case-Shiller U.S. Home Price Index and the Tentative Home Sales Index will be of interest. In Japan, the unemployment rate and retail sales will also be of interest.

 

Last week, the Nikkei 225 was above its assumed range. The upper price was about 630 yen above the assumed line and the lower price was about 150 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ on the upside (currently around 33520 yen) and the Bollinger Band -1σ on the downside (currently around 32830 yen).

 

This week is likely to be another week of political developments in Japan and the dollar/yen movement. The Nikkei 225 is likely to be volatile, though directionless.

Outlook for the Nikkei average this week [17-December 2023]

 [Fundamental viewpoint]

Stock indices rose for the week in the U.S. market last week as the market consensus was that inflation continued to slow and that the Fed would begin to cut interest rates next year.

Weekly change NY Dow: +2.92% NASDAQ: +2.85% S&P 500: +2.49%.

                                       

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 4.88 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 14.6, 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 4.88 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 50.4, or if the Nikkei Index is around 113,980 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 81,010 yen,

 

From a fundamental perspective, the Japanese market can be said to be about JPY81.010 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

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 +8.9%, an improvement of 0.3 percentage points from three months ago. Profit growth was +8.8%, an improvement of +6.4 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 3.48 to 3.22, while the U.S. dollar moved toward a stronger yen in the range of ¥146 to ¥140. The dollar index fell -1.34% 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 first week of December was likely oversold, the second week of December was likely overbought, and this week is expected to be overbought.Last week, of the five points, ① was bullish and ③ was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 6.2 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 2040 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 3.9 points (about 1290 yen in terms of the Nikkei average) undervalued in the medium to long term.

 

The Japanese market's overvaluation relative to the New York Dow weakened during the week.The VIX, a measure of U.S. market volatility, declined to a weekly low of 12.3. The Nikkei VI declined to a weekly low of 17.3. Market sentiment is optimistic in both the U.S. and Japanese markets.

 

The Nikkei 225 is above the 9-day and below 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 +6.7%The divergence between the Nikkei 225 and the 200-day moving average was +5.5%. 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been turning toward appreciation since November 2023. This week, we expect the yen to be in the 141-143 yen range.

 

This week, the U.S. market will focus on the November personal income and spending report featuring the PCE price index. In addition, the finalized third quarter GDP growth rate, the CB Consumer Confidence Index, and durable goods orders will be closely watched. In the housing sector, housing starts and existing and new home sales will be closely watched. Internationally, inflation and retail sales in the U.K. will be in focus, while in Japan, the Bank of Japan's interest rate decision, inflation, and external trade statistics will be in focus. In Germany, the Ifo business climate index, consumer confidence index, and producer inflation will be in focus.

 

Last week, the Nikkei 225 moved above its assumed range. The upside was about 110 yen above the assumed line and the downside was about 180 yen above the assumed line.

This week, the Nikkei 225 is expected to move above the 25-day line (currently near 33130 yen) and below the Bollinger Band -2σ (currently near 32370 yen).

 

This week is likely to be influenced by the Japanese political situation and the dollar/yen movement. The Nikkei 225 is likely to remain volatile.

Outlook for the Nikkei average this week [10-December 2023]

[Fundamental viewpoint]

In the U.S. market last week, stock indices rose for the week as concerns about an economic downturn eased after the release of the jobs report, although there were still phases of selling to adjust holdings in order to assess the jobs report.

Weekly change NY Dow: +0.01% NASDAQ: +0.69% S&P 500: +0.21%.

                                       

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 4.99 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 20.4 and the Nikkei 225's P/E ratio of 14.5, 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 4.99 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 52.1, or if the Nikkei Index is around 116,290 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 83,980 yen,

 

From a fundamental perspective, the Japanese market can be said to be about JPY83.980 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

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 +8.8%, an improvement of 0.2 percentage points from three months ago. Profit growth was +9.1%, an improvement of +6.7 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 to 3.48 from 3.51, while the dollar moved toward a stronger yen in the range of 147-141 yen. The dollar index rose +0.77% 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 fifth week of November was oversold, the first week of December was likely oversold, and this week is expected to be oversold. Of the five points last week, ③was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 5.5 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 1780 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 2.8 points (about 900 yen in terms of the Nikkei average) undervalued in the medium to long term.

 

The Japanese market's overvaluation relative to the New York Dow weakened during the week. The VIX, a measure of U.S. market volatility, declined to a weekly low of 12.4. The Nikkei VI rose to 19.7 for the week. Market sentiment is optimistic in the U.S. market and pessimistic in 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 +1.5%The divergence between the Nikkei 225 and the 200-day moving average was +3.8%. 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]

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 up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is down trend.

 

Analysis of the foreign exchange market shows that the yen has been turning toward appreciation since November 2023. This week, we expect the yen to be in the 144-147 yen range.

 

This week, the U.S. markets will release a number of very important indicators, including the Fed's interest rate decision, inflation data, and retail sales. Internationally, monetary policy announcements from the European Central Bank and the Bank of England will be of interest. In addition, the TANKAN Large Enterprises Manufacturing Index will be released in Japan, and preliminary PMIs will be released in Australia, Japan, the Eurozone, and the United Kingdom. In China, retail sales, industrial production, housing price index, and unemployment rate will be in focus.

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 170 yen below the assumed line and the downside was about 320 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 33030 yen) on the upside and Bollinger Band -2σ (currently around 32020 yen) on the downside.

 

This week will be influenced by the FOMC and the dollar/yen movement. The Nikkei 225 is likely to continue to be volatile.

Outlook for the Nikkei average this week [03-December 2023]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices rose for the week as the market continued to be supported by the view that the Fed's interest rate hike phase is over.

Weekly change NY Dow: +2.42% NASDAQ: +0.38% S&P 500: +0.77%.

                                       

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 4.87 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 20.5 and the Nikkei 225's P/E ratio of 14.8, 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 5.08 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 61.7, or if the Nikkei Index is around 120,250 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 86,820 yen,

 

From a fundamental perspective, the Japanese market can be said to be about JPY86,820 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

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 +8.9%, an improvement of 0.2 percentage points from three months ago. Profit growth was +8.7%, an improvement of +5.7 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 to 3.51 from 3.71, while the dollar moved toward a stronger yen in the range of 149-146 yen. The dollar index fell -0.21% 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 fourth and fifth weeks of November were likely overbought, and overbought is expected this week. Last week, of the five points, ① was bullish and ③ was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 1.2 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 400 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 1.0 points (about 330 yen in terms of the Nikkei average) overvalued in the medium to long term.

 

The strength of the Japanese market versus the NY Dow was extended during the week. The VIX, a measure of U.S. market volatility, declined to a weekly low of 12.6. The Nikkei VI fell to a weekly low of 16.2. Optimistic sentiment continued in both the U.S. and Japanese markets.

 

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 +13.9%The divergence between the Nikkei 225 and the 200-day moving average was +7.9%. Since the three factor is positive, a "green signal" is lit for the medium-term trend.

 

In the U.S. market, the NYDow is 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been weakening since January 2023. This week, we expect the yen to be in the range of 148 to 145 yen.

 

This week, the U.S. market will focus on the jobs report, the JOLTS job openings report, and the ISM Non-Manufacturing PMI. In addition, the University of Michigan Consumer Confidence Index and Manufacturing Orders will provide insight into economic conditions. Internationally, Australia's monetary policy and China's inflation rate will be in focus. In addition, China's services PMI and Germany's industrial production and manufacturing orders will help provide a comprehensive view of economic activity.

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 530 yen below the assumed line and the downside was about 380 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around 33610 yen) on the upside and the Bollinger Band -1σ (currently around 31660 yen) on the downside.

 

This week will be influenced by the JOLTS job openings and employment data. Volatility is low in both the U.S. and Japanese markets, but profit-taking is likely, and the Nikkei 225 is expected to struggle in a narrow range.

Outlook for the Nikkei average this week [26-November 2023]

 [Fundamental viewpoint]

Stock indices rose for the week last week in the U.S. market as the prevailing view was that the Fed's interest rate hike phase was over.

Weekly change NY Dow: +1.27% NASDAQ: +0.89% S&P 500: +1.00%.

                                       

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 5.08 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2024 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 20.5 and the Nikkei 225's P/E ratio of 14.9, 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 5.08 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 61.7, or if the Nikkei Index is around 138,980 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 105,350 yen,

 

From a fundamental perspective, the Japanese market can be said to be about 105,350 yen less attractive than the U.S. market. Last week, the weakness in the Japanese market diminished somewhat.

 

[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 +8.8%, an improvement of 0.3 percentage points from three months ago. Profit growth was +9.2%, an improvement of +6.9 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 3.69 to 3.71, but the dollar moved slightly higher against the yen in the range of ¥149 to ¥147. The dollar index fell -0.39% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.96% for Japan and +3.40% for the U.S., so the Japanese market is 0.44 percentage points inferior in this aspect.

⑤    The third week of November was overbought; the fourth week of November was likely overbought, and overbought is expected this week. Of the five points last week,  ①, ②, and ⑤ were bullish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 0.1 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 30 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 4.6 points (about 1,550 yen in terms of the Nikkei average) overvalued in the medium to long term.

 

The strength of the Japanese market versus the NY Dow was extended during the week. The VIX, a measure of U.S. market volatility, declined to a weekly low of 12.5. The Nikkei VI fell to a weekly low of 16.9. Optimistic sentiment continued in both the U.S. and Japanese markets.

 

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 +17.9%The divergence between the Nikkei 225 and the 200-day moving average was +9.1%. 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been weakening since January 2023. This week, we expect the yen to be in the range of 150 to 148 yen.

 

This week in the U.S. markets, PCE prices, personal income and spending, and the ISM manufacturing PMI will be released, as well as speeches by Chairman Powell and Fed officials. In addition, the CB Consumer Confidence Index, revised Q3 GDP growth, new home sales, and Q3 corporate earnings will also be in focus. Globally, speeches by senior officials from the ECB and the Bank of Japan are scheduled. Also of interest will be Eurozone inflation and China's manufacturing and services PMIs.

 

Last week, the Nikkei 225 moved mostly within its expected range. The upside was about 40 yen above the assumed line and the downside was about 80 yen above the assumed line.

This week, the Nikkei 225 is expected to move between Bollinger Band +2σ (currently around 34230 yen) on the upside and Bollinger Band +1σ (currently around 33210 yen) on the downside.

 

This week will be influenced by comments from Fed officials and PCE prices. Volatility is trending lower in both the U.S. and Japanese markets, and the Nikkei 225 is expected to rise moderately.

Outlook for the Nikkei average this week [19-November 2023]

 [Fundamental viewpoint]

In the U.S. markets last week, the release of the Consumer Price Index for October continued to lower long-term interest rates, and stock indexes rose for the week.

Weekly change NY Dow: +1.94% NASDAQ: +2.37% S&P 500: +2.24%.

                                       

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 4.99 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2024 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 20.2 and the Nikkei 225's P/E ratio of 14.9, 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 4.99 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 58.6, or if the Nikkei Index is around 131,790 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 98,210 yen,

 

From a fundamental perspective, the Japanese market can be said to be about JPY98,210 less attractive than the U.S. market. Last week, the weakness in the Japanese market diminished somewhat.

 

[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 +8.9%, an improvement of 0.3 percentage points from three months ago. Profit growth was +8.8%, an improvement of +6.2 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 3.81 to 3.69, moving the U.S. dollar to a range of 151 to 149 yen against the yen. The dollar index fell -1.88% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.96% for Japan and +3.40% for the U.S., so the Japanese market is 0.44 percentage points inferior in this aspect.

⑤    The second week of November was overbought; the third week of November was likely overbought, and overbought is expected this week. Of the five points last week,  ①, ②, and ⑤ were 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 0.6 points (about 200 yen when converted to 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 2,050 yen in terms of the Nikkei 225) higher in the medium to long term.

 

The strength of the Japanese market versus the NY Dow was extended during the week. The VIX, a measure of U.S. market volatility, declined to a weekly low of 13.8. The Nikkei VI fell to a weekly low of 18.3. Optimistic sentiment continued in both the U.S. and Japanese markets.

 

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 +18.8%The divergence between the Nikkei 225 and the 200-day moving average was +9.4%. 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been weakening since January 2023. This week, we expect the yen to be in the range of 150 to 148 yen.

 

In the U.S. markets this week, following the FOMC minutes, durable goods orders, S&P Global Services Index, manufacturing PMI, and existing and new home sales will be in focus. As the quarterly earnings season draws to a close, Zoom, NVIDIA, and others will be in focus. Internationally, manufacturing and services PMIs for the Eurozone, the U.K., and Japan will be released. Additionally, Japanese inflation will be in focus.

 

Last week, the Nikkei 225 moved above its assumed range. The upper price was about 210 yen above the assumed line and the lower price was about 130 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 33680 yen) on the upside and Bollinger Band +1σ (currently around 32820 yen) on the downside.

 

This week will be influenced by the FOMC minutes, NVIDIA earnings, and long-term interest rates. Volatility is trending lower in both the U.S. and Japanese markets, and the Nikkei 225 is expected to rise moderately.

Outlook for the Nikkei average this week [12-November 2023]

 [Fundamental viewpoint]

In the U.S. markets last week, stock indices rose for the week as long-term interest rates continued to fall on the back of receding speculation of additional interest rate hikes.

Weekly change NY Dow: +0.65% NASDAQ: +2.37% S&P 500: +1.31%.

                                       

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 5.09 points undervalued in the Japanese market when the revised OECD nominal GDP forecast for 2024 is taken into account. The undervaluation is due to the difference between the S&P 500's P/E ratio of 19.7 and the Nikkei 225's P/E ratio of 14.7, 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 5.09 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 58.8, or if the Nikkei Index is around 130,030 yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 97,460 yen,

 

From a fundamental perspective, the Japanese market can be said to be about 97,460 yen less attractive than the U.S. market. 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'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 +8.8%, an improvement of 0.6 percentage points from three months ago. Profit growth was +8.2%, an improvement of +5.4 percentage points from three months ago.

③    U.S. long-term interest rates rose, widening the interest rate differential between the U.S. and Japan from 3.66 to 3.81, and the U.S. dollar moved toward a weaker yen in the range of ¥149 to ¥151. The dollar index rose +0.70% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2024 is expected to be +2.96% for Japan and +3.40% for the U.S., so the Japanese market is 0.44 percentage points inferior in this aspect.

⑤    The first week of November was overbought; the second week of November was likely overbought, and overbought is expected this week. Of the five points last week,  ①, ②, and ⑤ were bullish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 0.1 points in the medium to long term in terms of the 200-day divergence from the NASDAQ (about 30 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is 5.2 points (about 1690 yen in terms of the Nikkei 225) more expensive in the medium to long term.

 

The strength of the Japanese market versus the NY Dow was extended during the week. The VIX, a measure of U.S. market volatility, declined to a weekly low of 14.2. The Nikkei VI was unchanged at 20.0 for the week. Optimistic sentiment continued in the U.S. 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 +10.7%The divergence between the Nikkei 225 and the 200-day moving average was +6.6%. 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]

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 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.

 

Analysis of the foreign exchange market shows that the yen has been weakening since January 2023. This week, we expect the yen to be in the range of 152 to 149 yen.

 

In the U.S. markets this week, the focus will be on the Consumer Price Index for October, with retail sales and speeches by Fed officials also in focus. In addition, producer prices, industrial production, import/export prices, building permits, and housing starts will also be in focus. Earnings season continues, with announcements by Home Depot, Cisco, TJX, Wal-Mart, Applied Materials, and others. Internationally, the focus will be on U.K. inflation, retail sales, and unemployment, as well as China's industrial production, retail sales, and fixed asset investment, plus Japan's third quarter GDP growth rate.

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 470 yen above the assumed line and the downside was about 80 yen below the assumed line.

This week, the Nikkei 225 is expected to move between Bollinger Band +2σ (currently around 32930 yen) on the upside and Bollinger Band +1σ (currently around 32290 yen) on the downside.

This week will be influenced by developments in the Middle East, U.S. inflation data, and long-term interest rates. Volatility in both the U.S. and Japanese markets is trending lower, and the Nikkei 225 is expected to rise moderately.