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

 [Present state recognition of fundamental]

In the U.S. market last week, stock indexes fell for the week as market participants continued to believe that a prolonged period of monetary tightening by the Fed would cool the economy.

Weekly volatility NY Dow: -2.99%, NASAQ: -4.21%, S&P 500: -3.29%.

                                       

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 3.56 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 16.7 and the Nikkei 225's expected PER of 12.6 or 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 3.56 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 23.0, or if the Nikkei 225 is about 50220 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 22570 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 22570 yen. Last week, the weakness of the Japanese market diminished.

 

[Conditions for Nikkei average rise]

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

①    Rising US market

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

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

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

⑤ Foreign investors over-buying

 

Looking at recent movements

①    Last week, the NY Dow weekly trend was negative. The daily footstep is under 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 in the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can return above the 25-day line.

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. In addition, the profit growth rate was +4.5%, an improvement of 3.7 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 2.83 to 2.96, causing the U.S. dollar to move against the yen in the range of ¥137 to ¥140. The dollar index rose +0.71% 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 August 4 week was oversold, the August 5 week was likely oversold, and this week is expected to be oversold. Of the five points last week, ① was bearish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in 200-day divergence from the NASDAQ is relatively high by 12.2 points (about 3370 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 7.4 points in the medium to long term (about 2050 yen, which is calculated in the Nikkei 225).

 

The strength of the Japanese market relative to the U.S. market narrowed during the week. The VIX, which indicates the volatility of the U.S. market, was at 25.47, above the 25 level that is indicative of investor anxiety, but declined slightly last week.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence rate turned negative at -0.6% compared to last week. The divergence from the 200-day moving average was +0.6%, narrowing the positive margin. 2 factors are positive, indicating a "yellow light" for the medium-term trend.

 

In the US market, the NYDow is below 9-day line and the 25-day and the 200-day line. It is below the clouds on the Ichimoku Kinko Chart. The NASDAQ is below the 9-day line and the 25-day and the 200-day line. It is in the clouds on the Ichimoku Kinko Chart.

This is a "red light" in the short term and a "yellow light" in the medium term.

 

[Outlook for this week]

Looking at the U.S. market from a fundamental perspective, concerns about a slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed financial instability.

 

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

 

From a technical standpoint, the U.S. market is in a medium-term holding pattern and a downtrend in the short term. The Japanese market is also in a medium-term holding pattern with a short-term downtrend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 139-142 yen range.

 

This week will see meetings by the central banks of the Eurozone, Australia, and Canada, as well as several speeches by Fed officials. In addition, inflation and external trade statistics will be released in China, and GDP updates are scheduled for Australia, the Eurozone, Japan, and Canada. Investors will also be closely watching the situation in European energy markets, as the critical pipeline that supplies gas from Russia to Germany will not be restarted as scheduled..

 

Last week, the Nikkei 225 fell below its assumed range. The upside was about 500 yen below the assumed line and the downside was about 240 yen below the assumed line. This week, the Nikkei 225 is expected to move between the 25-day line (currently around 28270 yen) on the upside and Bollinger Band -2σ (currently around 27340 yen) on the downside.

 

Although the U.S. market fell last week, volatility did not increase on the week, and the Nikkei 225 is expected to remain lower this week.

Outlook for the Nikkei average this week [28-August- 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, Fed Chairman Jerome Powell reiterated in his speech that the Fed would continue to raise interest rates, with the top priority being to control inflation. Stock indices fell during the week as speculation of a prolonged period of monetary tightening increased.

Weekly volatility NY Dow: -4.22%, NASAQ: -4.44%, S&P 500: -4.04%.

                                       

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 3.74 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 13.0 or 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 3.74 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 25.3, or if the Nikkei 225 is about 55750 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 27110 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 ¥26680. Weakness in the Japanese market has 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, the NY Dow weekly trend was negative. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can return above the 25-day line.

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. In addition, the profit growth rate was +4.3%, an improvement of 4.1 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 2.78 to 2.83, causing the dollar to move against the yen in the range of ¥135 to ¥137. The dollar index rose +0.68% 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    It was likely oversold in the August 3 week and overbought in the August 4 week, and is expected to be oversold 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 200-day divergence from the NASDAQ is relatively high by 12.4 points (about 3550 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 8.2 points in the medium to long term (about 2350 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market extended. The VIX, a measure of the volatility of the U.S. market, was 25.56, above the 25 mark, a sign of investor anxiety.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +10.4%, narrowing the positive range compared to last week. The divergence from the 200-day moving average was +4.0%, narrowing the positive margin. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is below 9-day line and the 25-day and the 200-day line. It is above the clouds on the Ichimoku Kinko Chart. The NASDAQ is below the 9-day line and the 25-day and the 200-day line. It is above the clouds on the Ichimoku Kinko Chart.

This is a "red light" in the short term and a "yellow light" in the medium term.

 

[Outlook for this week]

Looking at the U.S. market from a fundamental perspective, concerns about a slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 136-139 yen range.

 

This week, investors will be most interested in the U.S. jobs report for August, as they speculate on the impact of the Fed's change in its rate hike plans. Other releases will include the German and Eurozone consumer price indexes and China's PMI. Also of interest will be German retail sales and the U.S. ISM manufacturing index for August.

 

Last week, the Nikkei 225 remained within the assumed range. The upper price was about 420 yen below the assumed line and the lower price was about 100 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around 28730 yen) on the upside and the Bollinger Band -1σ (currently around 27760 yen) on the downside.

 

Volatility has spiked due to a sharp decline in the U.S. markets over the weekend, and the Nikkei 225 is likely to trend lower this week.

Outlook for the Nikkei average this week [21-August- 2022]

 [Present state recognition of fundamental]

In the U.S. market last week, stock indexes fell for the week as short-term profit-taking prevailed, as long-term interest rates temporarily rose to a one-month high of 2.99%, which had been on an upward trend since mid-July.

Weekly volatility NY Dow: -0.16%, NASAQ: -2.62%, S&P 500: -1.21%.

                                       

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 3.69 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 13.0 or 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 3.69 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 25.0, or if the Nikkei 225 is about 55610 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 26680 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 ¥26680. Weakness in the Japanese market has 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, the NY Dow weekly trend was negative. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. NASDAQ weekly trend was negative. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can keep above the 25-day line.

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 0.3 percentage points from three months ago. In addition, the profit growth rate was +4.3%, an improvement of 6.6 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 2.69 to 2.78, moving the dollar against the yen in the range of 132 to 137 yen. The dollar index rose +2.30% 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 August 2 week was overbought; the August 3 week was likely overbought; this week is expected to be oversold. Of the five points last week, ③ was bullish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in 200-day divergence from the NASDAQ is relatively high by 9.8 points (about 2840 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 6.4 points in the medium to long term (about 1850 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market extended. The VIX, a measure of the volatility of the U.S. market, was 20.60, above the 20 mark, a sign of investor anxiety.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +15.0%, expanding the positive range compared to last week. The divergence from the 200-day moving average was +5.0%, expanding the positive margin. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above 9-day line and the 25-day but below the 200-day line. It is above the clouds on the Ichimoku Kinko Chart. The NASDAQ is above the 25-day line but below the 9-day and the 200-day line. It is above the clouds on the Ichimoku Kinko Chart.

This is a "yellow 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 slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 135-138 yen range.

 

Investors will be watching the Jackson Hole meeting closely this week, speculating whether or not the Fed will change its rate hike plans. Other releases will include August PMIs for the U.S., U.K., Australia, Germany, France, and Japan. Also of interest will be the People's Bank of China's interest rate decision, new home sales in the U.S. for July, and durable goods orders for July.

 

Last week, the Nikkei 225 remained mostly within the expected range. The upper price was about 40 yen above the assumed line and the lower price was about 940 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently near 29260 yen) on the upside and the 25-day line (currently near 27980 yen) on the downside.

 

Although selling pressure on credit is weak, volatility has turned to an upward trend, and the Nikkei 225 is likely to lose its upward momentum and be vulnerable to a decline.

Outlook for the Nikkei average this week [14-August- 2022]

 [Present state recognition of fundamental]

In the U.S. market last week, stock indexes rose sharply for the week as the consumer price index for July came in below market expectations, easing inflation fears and reducing speculation of an accelerated rate hike by the Fed.

Weekly volatility NY Dow: +2.92%, NASAQ: +3.08%, S&P 500: +3.26%.

                                       

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 3.75 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 18.7 and the Nikkei 225's expected PER of 12.9 or 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 3.75 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 25.0, or if the Nikkei 225 is about 55280 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 26730 yen in the medium to long term.

 

From a fundamental perspective, it can be said that the Japanese market is less attractive than the U.S. market by 26730 yen. The weakness of the Japanese market has been magnified.

 

[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 under the 200-day line and above the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can keep above the 25-day line.

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 0.4 percentage points from three months ago. In addition, the profit growth rate was +4.0%, an improvement of 5.0 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 2.67 to 2.69, but the dollar moved toward yen appreciation in the range of ¥135 to ¥131. The dollar index fell -0.85% 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    August 1 week was oversold; August 2 week was likely overbought; this week is expected to be overbought. 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 200-day divergence from the NASDAQ is relatively high by 6.4 points (about 1830 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 3.8 points in the medium to long term (about 1080 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market diminished. The VIX, a measure of U.S. market volatility, was 19.53, below the 20 mark, indicating a downward trend in investor sentiment.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +13.2%, expanding the positive range compared to last week. The divergence from the 200-day moving average was +3.6%, expanding the positive margin. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above 9-day line and the 25-day but below the 200-day line. It is above the clouds on the Ichimoku Kinko Chart. The NASDAQ is above the 9-day and the 25-day line but below the 200-day line. It is above the clouds on the Ichimoku Kinko 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 slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 134-130 yen range.

 

This week, investors will be reading the FOMC minutes carefully, speculating on whether or not the Fed's rate hike plans will change. Other scheduled releases include consumer price indexes for the U.K. and Canada. In the U.S., the August New York Fed business index and retail sales will also be closely watched.

 

Last week, the Nikkei 225 remained within the assumed range. The upper price was about 200 yen below the assumed line and the lower price was about 340 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 28750 yen) on the upside and the 25-day line (currently around 27490 yen) on the downside.

 

Although selling pressure on credit is somewhat high, volatility is declining and the Nikkei 225 does not appear to be overheated, so there is still room for higher prices.

Outlook for the Nikkei average this week [8-August- 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, equity indices were mixed for the week, as strong economic indicators were released and stocks with good earnings rose, while long-term interest rates rose over the weekend.

Weekly volatility NY Dow: -0.13%, NASAQ: +2.15%, S&P 500: +0.36%.

                                       

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 3.60 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 18.2 and the Nikkei 225's expected PER of 12.9 or 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 3.60 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 24.1, or if the Nikkei 225 is about 52560 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 24380 yen in the medium to long term.

 

From a fundamental perspective, it can be said that the Japanese market is less attractive than the U.S. market by 24380 yen. The weakness of the Japanese market has been magnified.

 

[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 +1.8%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    Last week, the NY Dow weekly trend was negative. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line and above the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can keep above the 25-day line.

②    As a result of the announcement of quarterly financial results, the forecasted ROE for the Nikkei 225 indexes came in at 9.1, 0.5 points worse than three months ago. In addition, the profit growth rate was +4.2%, 8.5 percentage points worse than three months ago.

③    U.S. long-term interest rates rose and the interest rate differential between the U.S. and Japan widened from 2.48 to 2.67, causing the U.S. dollar to move against the yen in the range of ¥130 to ¥135. The dollar index rose +0.71% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2023 is expected to be +1.8% for Japan and +4.9% for the U.S., so the Japanese market is 3.1 percentage points inferior in this aspect.

⑤    The market was oversold in the July 4 week; it was likely overbought in the August 1 week, and is expected to be overbought this week. Of the five points last week, ② and ③ were bullish. ①②③⑤ are expected to have an impact.

 

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in 200-day divergence from the NASDAQ is relatively high by 8.4 points (about 2370 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 5.5 points in the medium to long term (about 1550 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market narrowed. The VIX, a measure of U.S. market volatility, was 21.15, below the 25 level that indicates rising investor anxiety and is trending lower.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The overall divergence was +10.5%, expanding the positive range compared to last week. The divergence from the 200-day moving average was +2.2%, expanding the positive margin. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above 9-day line and the 25-day but below the 200-day line. It is above the clouds on the Ichimoku Kinko Chart. The NASDAQ is above the 9-day and the 25-day line but below the 200-day line. It is above the clouds on the Ichimoku Kinko 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 slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 134-137 yen range.

 

This week, investors will be closely watching the U.S. Consumer Price Index for July. If it shows that inflation has remained strong despite the decline in commodity prices, the Fed's interest rate hike may be further reinforced. Other consumer price index releases are scheduled in China, Mexico, Brazil, and India. The U.K.'s second quarter GDP will also be of interest.

 

Last week, the Nikkei 225 remained within the assumed range. The upper price was about 300 yen below the assumed line and the lower price was about 510 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 28580 yen) on the upside and the 25-day line (currently around 27170 yen) on the downside.

 

Volatility is declining and credit selling pressure is also decreasing, so there is still room for the Nikkei 225 to move higher.

Outlook for the Nikkei average this week [31-July- 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, stock indexes rose for the week after passing through the FOMC and preliminary GDP releases for the April-June period without a stir.

Weekly volatility NY Dow: +2.97%, NASAQ: +4.70%, S&P 500: +4.26%.

                                       

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 3.33 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 12.9 or 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 3.33 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 22.7, or if the Nikkei 225 is about 48750 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 20950 yen in the medium to long term.

 

From a fundamental perspective, it can be said that the Japanese market is less attractive than the U.S. market by 17430 yen. The weakness of the Japanese market has been magnified.

 

[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 +1.8%) 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 under the 200-day line and in the clouds of the equilibrium chart. NASDAQ weekly trend was positive. The daily footstep is under the 200-day line and in the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can keep above the 25-day line.

②    As a result of the announcement of quarterly financial results, the forecasted ROE for the Nikkei 225 indexes came in at 9.2, 0.1 points worse than three months ago. In addition, the profit growth rate was +3.4%, 24.6 percentage points worse than three months ago.

③    U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 2.55 to 2.48, moving the dollar against the yen in the range of ¥137 to ¥132. The dollar index fell -0.67% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2023 is expected to be +1.8% for Japan and +4.9% for the U.S., so the Japanese market is 3.1 percentage points inferior in this aspect.

⑤    It was likely overbought in the July 4 week and overbought in the July 3 week, and is expected to be overbought this week. 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 200-day divergence from the NASDAQ is relatively high by 9.6 points (about 2670 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 4.2 points in the medium to long term (about 1170 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market narrowed. The VIX, a measure of U.S. market volatility, was 21.33, below the 25 level that indicates rising investor anxiety and is trending lower.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The Nikkei 225 is now above the Ichimoku Kinko's Kumo (equilibrium) cloud, and the divergence from the 200-day moving average is +2.1%. The divergence from the 200-day moving average is +2.1%, turning positive. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above 9-day line and the 25-day but below the 200-day line. It is above the clouds on the Ichimoku Kinko Chart. The NASDAQ is above the 9-day and the 25-day line but below the 200-day line. It is above the clouds on the Ichimoku Kinko 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 slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 134-131 yen range.

 

This week, most attention will be focused on the July jobs report in the United States. Monetary policy in the U.K. and Australia will also be of interest. Other economic indicators will include the July ISM Manufacturing Index and ISM Non-Manufacturing Index in the United States. Also of interest is the impact of the OPEC Plus meeting on oil prices.

 

Last week, the Nikkei 225 remained mostly within the assumed range. The upper price was about 30 yen above the assumed line and the lower price was about 720 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 28180 yen) on the upside and the 25-day line (currently around 26930 yen) on the downside.

 

Volatility is trending lower and selling pressure on credit is also decreasing, so we expect the Nikkei 225 to be firm this week.

Outlook for the Nikkei average this week [24-July- 2022]

 [Present state recognition of fundamental]

In the U.S. markets last week, stock indexes rose for the week as speculation that the Fed would move to raise interest rates sharply receded somewhat.

Weekly volatility NY Dow: +1.95%, NASAQ: +3.33%, S&P 500: +2.55%.

                                       

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 2.89 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 17.1 and the Nikkei 225's expected PER of 13.3 or 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 2.89 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 21.6, or if the Nikkei 225 is about 45340 yen compared to the current price of the Nikkei 225. The Japanese market is undervalued by about 1743 yen in the medium to long term.

 

From a fundamental perspective, it can be said that the Japanese market is less attractive than the U.S. market by 17430 yen. The weakness of the Japanese market has been magnified.

 

[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 +1.8%) 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 under 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 and the clouds of the equilibrium chart. This week, we will be watching to see if the NYDow can keep above the 25-day line.

②    As a result of the announcement of quarterly financial results, the forecasted ROE for the Nikkei 225 indexes came in at 9.02, 0.3 points worse than three months ago. In addition, the profit growth rate was +0.4%, 28.4 percentage points worse than three months ago.

③    U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 2.70 to 2.55, moving the dollar against the yen in the range of ¥138 to ¥135. The dollar index fell -1.33% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2023 is expected to be +1.8% for Japan and +4.9% for the U.S., so the Japanese market is 3.1 percentage points inferior in this aspect.

⑤    It was likely oversold in the July 2 week and overbought in the July 3 week, and is expected to be overbought this week. 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 200-day divergence from the NASDAQ is relatively high by 12.1 points (about 3380 yen when calculated for the Nikkei 225) over the medium to long term. On the other hand, in terms of the difference in 200-day divergence from the NYDow, it is overvalued by 5.1 points in the medium to long term (about 1420 yen, which is calculated in the Nikkei 225).

 

During the week, the strength of the Japanese market relative to the U.S. market expanded. The VIX, which indicates the volatility of the U.S. market, was 23.03, below the 25 level, which is indicative of heightened investor anxiety, and is trending lower.

 

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

The Nikkei 225 is above the Ichimoku Kinko Chart. The Nikkei 225 is now above the Ichimoku Kinko's Kumo (equilibrium) cloud, and the divergence from the 200-day moving average is +2.1%. The divergence from the 200-day moving average is +2.1%, turning positive. 3 factors are positive, indicating a "green light" for the medium-term trend.

 

In the US market, the NYDow is above 9-day line and the 25-day but below the 200-day line. It is in the clouds on the Ichimoku Kinko Chart. The NASDAQ is above the 9-day and the 25-day line but below the 200-day line. It is in the clouds on the Ichimoku Kinko 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 slowdown in the global economy due to the spread of the new coronavirus, the lack of creditworthiness of banks in the EU and the political situation, the trade friction between the U.S. and China, and problems in North Korea have receded, but risk factors include Ukraine conflict, interest rate hikes in the U.S., rising long-term interest rates, rising oil prices, turmoil in financial markets due to the bursting of the real estate bubble and credit crunch in China, and geopolitical risks in the Middle East and East Asia.

 

Recent LIBOR rates have been on an upward trend and require continued attention. Even in March 2020, the LIBOR rate rose despite a decline in short-term interest rates, raising awareness of the possibility of renewed 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 a short-term up trend.

 

Analysis of the foreign exchange market shows that in 2020, the yen was moving in the direction of a gradual appreciation, but as we move into 2021, the yen continues to trend lower. This week, the yen is expected to be in the 138-135 yen range.

 

This week will be the busiest week of the summer in the United States, with the Fed's monetary policy decision, second quarter GDP growth, and earnings reports from more than one-third of the S&P 500 companies. In addition, the Eurozone's largest economies, including Germany, France, Italy, and Spain, will release important reports on growth and inflation.

 

Last week, the Nikkei 225 moved in line with the assumed range. The upper price was in line with the assumed line and the lower price was about 30 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 27700 yen) on the upside and the 25-day line (currently around 26600 yen) on the downside.

 

Volatility is trending lower, but selling pressure on credit is increasing somewhat. Technical indicators indicating overbought conditions are also scattered, so the Nikkei 225 is likely to peak out this week.