Nikkei average forecast

2024年10月14日月曜日

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

[Fundamental viewpoint]

In the U.S. market last week, stock indices rose over the week on expectations that stocks will continue to rise due to the resilience of the U.S. economy and strong quarterly earnings announcements, despite concerns about tensions in the Middle East.

Weekly change NY Dow: +1.21%, NASDAQ: +1.13%, S&P 500: +1.11%.

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 4.36 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.8and the Nikkei 225's P/E ratio of 15.8 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 4.36 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 51.3 Or, the Nikkei 225 will be around 128,190 yen.

As a result, the Japanese market is undervalued by about 88,580 yen in the medium to long term.

From a fundamental perspective, the Japanese market can be said to be about 88,580 yen less attractive than the U.S. market. Weakness in the Japanese market was somewhat 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 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① The weekly leg of the NYDow was positive last week. The daily chart is above the 200-day line and above the clouds of the Ichimoku Chart. The NASDAQ's weekly leg was positive last week. The daily chart is above the 200-day line and above the equilibrium cloud. This week, the focus will be on whether or not the NY Dow can keep above the 25-day line.

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.8%, a deterioration of 0.2 percentage points from three months ago. The profit growth rate was +2.1%, an improvement of 1.5 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 3.10 to 3.16, causing the dollar/yen to move toward a weaker yen in the range of ¥147 to ¥149. The dollar index fell +0.42% for the week.

④ The OECD's nominal GDP growth rate for Japan and the U.S. in 2025 is expected to be +3.0% for Japan and +3.9% for the U.S., so the Japanese market is 0.9 percentage points inferior in this aspect.

⑤ The first week of October was likely overbought, the first week of October was likely overbought, and overbought is expected this week. Of the five points last week, ① and ③ and ⑤ were bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 5.2 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2060 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 4.4 points in the medium to long term (about 1740 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, rose to 20.5 for the week. The Nikkei VI fell to a weekly low of 28.7. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is above the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is +12.4%. The divergence from the 200-day moving average was +4.2% since three factors are positive, a “green light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is above the 9-day, and 25-day lines, and 200-day line. The NASDAQ is above the Ichimoku Chart cloud.

This is a “green signal” in the short term and a “green signal” in the medium term.

[Outlook for this week]

Looking at the U.S. market in terms of fundamentals, we are aware of concerns of a recession in the near term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, economic recession due to energy shortages and deteriorating political conditions in the EU, U.S.-China trade friction, financial market turmoil caused by the bursting of China's real estate bubble and credit crunch, and expanding geopolitical risks in the Middle East.

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 turned toward appreciation after peaking at 162 yen in June 2024. This week, we expect the yen to be between ¥149 and ¥146.

This week's US markets will focus on retail sales and speeches by Fed officials. The New York Fed Manufacturing Index, Industrial Production and Housing Starts will also be released. Meanwhile, earnings releases are scheduled for UnitedHealth, J&J, Bank of America, Abbott, Netflix and Procter & Gamble. Globally, the ECB's interest rate decision, industrial production in the eurozone and unemployment and inflation in the UK, retail sales, retail sales in China, industrial production, unemployment, fixed asset investment, GDP growth in the third quarter and inflation in Japan will be released.

Last week, the Nikkei 225 remained within its assumed range. The upper price was about JPY 340 below the assumption and the lower price was about JPY 1,190 above the assumed line.

The assumed range for the Nikkei 225 this week is expected to be between the Bollinger Band +2σ (currently around JPY 40300) on the upside and the 25-day line (currently around JPY 37780) on the downside.

The Nikkei 225 is likely to continue its upward trend this week, with volatility trending down and market overheating not so high.

2024年10月6日日曜日

Outlook for the Nikkei average this week [6-October 2024]

[Fundamental viewpoint]

In the U.S. market last week, stock indices rose during the week on expectations that the U.S. economy could have a soft landing after a favorable jobs report, although tensions in the Middle East are a cause for concern.

Weekly change NY Dow: +0.09%, NASDAQ: +0.10%, S&P 500: +0.22%.

The difference in the yield spread between the Japanese and U.S. markets is 4.36 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.7 and the Nikkei 225's P/E ratio of 15.6, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 4.36 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 48.7. Or, the Nikkei 225 will be around 120,760 yen.

As a result, the Japanese market is undervalued by about 82,130 yen in the medium to long term.

From a fundamental perspective, the Japanese market can be said to be about 82,130 yen less attractive than the U.S. market. Weakness in the Japanese market was somewhat 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 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.8%, a deterioration of 0.1 percentage points from three months ago. The profit growth rate was +2.5%, an improvement of 1.3 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 2.92 to 3.10, causing the dollar/yen to move toward a weaker yen in the range of ¥141 to ¥148. The dollar index fell +2.06% for the week.

⑤ The fourth week of September was oversold, the first week of October was likely oversold, and this week is expected to be overbought. Of the five points last week, ① and ③ were bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 6.7 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2590 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 5.6 points in the medium to long term (about 2160 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, rose to 19.2 for the week. The Nikkei VI fell to a weekly low of 25.1. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is above the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is +5.8%. The divergence from the 200-day moving average was +2.0% since two factors are positive, a “green light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is above the 9-day, and 25-day lines, and 200-day line. The NASDAQ is above the Ichimoku Chart cloud.

This is a “green signal” in the short term and a “green signal” in the medium term.

[Outlook for this week]

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

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

Analysis of the foreign exchange market shows that the yen has turned toward appreciation after peaking at 162 yen in June 2024. This week, we expect the yen to be between ¥149 and ¥146.

This week in the U.S. markets will be an important week with the release of the September CPI, the release of the FOMC meeting minutes, and the start of earnings season; speeches by Fed officials, the producer price index, the Michigan consumer confidence index, and trade statistics will also be of interest. Globally, German manufacturing orders and industrial production, retail sales, and U.K. GDP growth and factory utilization will be in focus.

Last week, the Nikkei 225 moved above its assumed range. The upside was about 490 yen above our assumption and the downside was about 1170 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 39770 yen) on the upside and the 25-day line (currently around 37580 yen) on the downside.

This week, the Nikkei 225 is likely to move toward the +2σ Bollinger band at the beginning of the week following the strong dollar and weak yen at the end of last week, but it is likely to continue to fluctuate wildly.

2024年9月29日日曜日

Outlook for the Nikkei average this week [29-September 2024]

[Fundamental viewpoint]

In the U.S. markets last week, the stock indices rose over the week as Micron Technology's strong earnings led to a rally in semiconductor stocks and hopes that the U.S. economy can make a soft landing.

Weekly change NY Dow: +0.59%, NASDAQ: +0.95%, S&P 500: +0.62%.

The difference in the yield spread between the Japanese and U.S. markets is 4.00 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.7 and the Nikkei 225's P/E ratio of 16.1, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 4.00 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 45.3. Or, the Nikkei 225 will be around 111,990 yen.

As a result, the Japanese market is undervalued by about 72,160 yen in the medium to long term.

From a fundamental perspective, the Japanese market can be said to be about 72,160 yen less attractive than the U.S. market. Weakness in the Japanese market was somewhat 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 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.7%, a deterioration of 0.2 percentage points from three months ago. The profit growth rate was +2.5%, an improvement of 1.2 percentage points from three months ago.

③ Although U.S. long-term interest rates rose and the interest rate differential between the U.S. and Japan widened from 2.91 to 2.92, the U.S. dollar moved toward a stronger yen in the range of ¥146 to ¥142. The dollar index fell -0.32% for the week.

⑤ The third week of September was likely oversold, the fourth week of September was likely overbought, and this week is expected to be oversold. Of the five points last week, ① and ③ were bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 3.5 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 1,390 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 2.3 points in the medium to long term (about 920 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, rose to 17.0 for the week. The Nikkei VI rose to 26.5 for the week. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is above the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is +15.6%. The divergence from the 200-day moving average was +5.6% since two factors are positive, a “green light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is above the 9-day, and 25-day lines, and 200-day line. The NASDAQ is above the Ichimoku Chart cloud.

This is a “green signal” in the short term and a “green signal” in the medium term.

[Outlook for this week]

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

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

Analysis of the foreign exchange market shows that the yen has turned toward appreciation after peaking at 162 yen in June 2024. This week, we expect the yen to be between ¥143 and ¥140.

In the U.S. markets this week, the September jobs report and speeches by Fed Chairman Jerome Powell and several Fed officials will be the main focus of market attention. Other data of interest include the JOLTS job openings report, ISM manufacturing and services PMIs, and new orders for manufacturing. Globally, Eurozone inflation and China's manufacturing and services PMIs will be of interest. In Japan, industrial production, retail sales, unemployment rate, consumer confidence index, and the Bank of Japan's Tankan will be released.

Last week, the Nikkei 225 moved slightly above its assumed range. The upside was about 100 yen above our assumption and the downside was about 410 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around 38650 yen) on the upside and the Bollinger Band -1σ (currently around 36490 yen) on the downside.

This week, the Nikkei 225 is likely to search for a new equilibrium point after falling sharply at the beginning of the week due to the market's missed expectations of the birth of Governor Takaichi.

2024年9月23日月曜日

Outlook for the Nikkei average this week [23-September 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices rose sharply during the week on the belief that the U.S. economy could have a soft landing following the Fed's significant 0.5% interest rate cut.

Weekly change NY Dow: +1.62%, NASDAQ: +1.49%, S&P 500: +1.38%.

The difference in the yield spread between the Japanese and U.S. markets is 4.23 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.1 and the Nikkei 225's P/E ratio of 15.0, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 4.23 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 41.2. Or, the Nikkei 225 will be around 103,450 yen.

As a result, the Japanese market is undervalued by about 65,730 yen in the medium to long term.

From a fundamental perspective, the Japanese market can be said to be about 65,730 yen less attractive than the U.S. market. Weakness in the Japanese market was somewhat 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 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.8%, a deterioration of 0.2 percentage points from three months ago. The profit growth rate was +2.6%, an improvement of 1.5 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 2.82 to 2.91, causing the dollar/yen to move toward a weaker yen in the range of ¥139 to ¥144. The dollar index fell -0.37% for the week.

④ The OECD's nominal GDP growth rate for Japan and the U.S. in 2025 is expected to be +2.9% for Japan and +3.9% for the U.S., so the Japanese market is 1.0 percentage points inferior in this aspect.

⑤ The second week of September was likely oversold, the third week of September was likely overbought, and this week is expected to be overbought. Of the five points last week, ① and ③ were bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 8.3 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 3,130 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 7.2 points in the medium to long term (about 2,720 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, declined to a weekly low of 16.2. The Nikkei VI fell to a weekly low of 24.3. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is above the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is -0.5%. The divergence from the 200-day moving average was +0.3% since two factors are positive, a “yellow light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is above the 9-day, and 25-day lines, and 200-day line. The NASDAQ is above the Ichimoku Chart cloud.

This is a “green signal” in the short term and a “green signal” in the medium term.

[Outlook for this week]

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

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

Analysis of the foreign exchange market shows that the yen has turned toward appreciation after peaking at the 162 yen level, which was reached in June 2024. This week, a range of 140 yen to 145 yen is expected.

This week, U.S. markets will focus on PCE prices, personal income, and consumer spending, as well as speeches by several Fed officials, including Fed Chairman Jerome Powell. Also in focus will be the finalized Q2 GDP growth, PMI data, the CB Consumer Confidence Index, durable goods orders, and the number of new and preliminary existing home sales. Globally, attention will be focused on September PMIs for Japan, the Eurozone, and the U.K., Australia's interest rate decision, inflation in France and Spain, and the German consumer confidence index.

Last week, the Nikkei 225 moved above its assumed range. The upside was about 530 yen above our assumption and the downside was about 410 yen above the assumed line.

This week, the Nikkei 225 is expected to move within the assumed range with the upper price at the Bollinger Band +2σ (currently around 39330 yen) and the lower price between the 25-day line (currently around 37450 yen).

This week, the US long-term interest rates and the US dollar/yen will be of interest. If the U.S. long-term interest rates continue to rise, the Nikkei 225 will be able to approach the +2σ Bollinger band.

2024年9月16日月曜日

Outlook for the Nikkei average this week [16-September 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices rose sharply during the week on expectations that the FOMC will extend the interest rate cut to 0.5% following the release of economic indicators showing subdued inflation.

Weekly change NY Dow: +2.60%, NASDAQ: +5.95%, S&P 500: +4.02%.

The difference in the yield spread between the U.S. and Japanese markets is 4.12 percentage points undervalued in the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the P/E ratio of 22.7 for the S&P 500 and 14.9 for the Nikkei 225, the difference in interest rates between Japan and the U.S., 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 4.12 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 becomes about 38.6, or if the Nikkei Average is about 94,780 The Japanese market is undervalued by about 58,190 yen in the medium to long term because the Japanese and U.S. markets can be interpreted as being in equilibrium when the Nikkei 225 is about 94,780 yen.

From a fundamental perspective, the Japanese market can be said to be about ¥58,190 less attractive than the U.S. market. Weakness in the Japanese market was somewhat 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 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.7%, a deterioration of 0.2 percentage points from three months ago. The profit growth rate was +2.2%, an improvement of 1.5 percentage points from three months ago.

③ U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 2.87 to 2.82, moving the yen against the dollar in the range of ¥143 to ¥140. The dollar index fell -0.07% for the week.

⑤ The first week of September was oversold, the second week of September was likely oversold, and this week is expected to be oversold. Last week, of the five points, ① was bullish and ③ and ⑤ were bearish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 10.1 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 3,690 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 8.8 points in the medium to long term (about 3,220 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, declined to a weekly low of 16.6. The Nikkei VI fell to a weekly low of 28.8. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is within the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is -9.3%. The divergence from the 200-day moving average was -2.6% since these three factors are positive, a “yellow light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is above the 9-day, and 25-day lines, and 200-day line. The NASDAQ is above the Ichimoku Chart cloud.

This is a “green signal” in the short term and a “green signal” in the medium term.

[Outlook for this week]

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

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

Analysis of the foreign exchange market shows that the yen has turned toward appreciation after peaking at the 162 yen level, which was reached in June 2024. This week, a range of 137 yen to 142 yen is expected.

In the U.S. markets this week, attention will be focused on the range of interest rate cuts to be decided by the FOMC. Also, the New York Fed manufacturing index for September, retail sales for August, industrial production for August, and housing starts for August will likely be in focus. Globally, the UK CPI, interest rate decision, retail sales, and Japanese interest rate decision will likely be in focus.

Last week, the Nikkei 225 remained within the assumed range. The upside was about 350 yen below our assumption and the downside was about 530 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 37330 yen) on the upside and Bollinger Band -2σ (currently around 35210 yen) on the downside.

This week, the US market is likely to be concerned with concerns of a recession and the extent of interest rate cuts. In the Japanese market, the dollar/yen market is likely to be affected by these factors, and the market will be both happy and sad.

2024年9月8日日曜日

Outlook for the Nikkei average this week [8-September 2024]

[Fundamental viewpoint]

In the U.S. market last week, stock indices fell sharply during the week as profit-taking spread among semiconductors and other high-tech stocks due to concerns about economic recession following the release of economic indicators.

Weekly volatility NY Dow: -2.93%, NASDAQ: -5.77%, S&P 500: -4.25%.

The difference in the yield spread between the Japanese and U.S. markets is 4.07 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 22.6 and the Nikkei 225's P/E ratio of 15.1, the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.
This means that if the difference in GDP growth between Japan and the U.S. in 2022 is 4.07 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 39.1 or if the Nikkei Index is around 94,240yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 57,850yen,

From a fundamental perspective, the Japanese market can be said to be about 57,850 yen less attractive than the U.S. market. Weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

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

① Rising US market

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

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

④ Upward revision of Japan's 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① The weekly leg of the NYDow was negative last week. The daily chart is above the 200-day line and above the clouds of the Ichimoku Chart. The NASDAQ's weekly leg was negative last week. The daily chart is above the 200-day line and below the equilibrium cloud. This week, the focus will be on whether or not the NY Dow can return above the 25-day line.

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.8%, a deterioration of 0.2 percentage points from three months ago. The profit growth rate was +2.3%, an improvement of 1.3 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 3.02 to 2.87, moving the yen against the dollar in the range of ¥147 to ¥141. The dollar index fell -0.53% for the week.

⑤ The fourth week of August was oversold, the first week of September was likely oversold, and this week is expected to be oversold. Of the five points last week, ① and ③,⑤ were bearish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 4.9 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 1,780 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 6.7 points in the medium to long term (about 2,440 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, rose to 22.4 for the week. The Nikkei VI rose to 29.1 for the week. Both the U.S. and Japanese markets are volatile.

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

The Nikkei 225 is under the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is -1.0%. The divergence from the 200-day moving average was -2.9% since these three factors are positive, a “red light” has been given to the medium-term trend.

In the U.S. market, the NYDow is below the 9-day, and 25-day lines, and above 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is below the 9-day, and 25-day lines, and above 200-day line. The NASDAQ is below the Ichimoku Chart cloud.

This is a “red signal” in the short term and a “yellow signal” in the medium term.

[Outlook for this week]

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

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

Inflation will be the focus of attention in the U.S. markets this week with the release of the Consumer Price Index and the Producer Price Index. Attention will also be focused on the presidential candidates' televised debate and the University of Michigan Consumer Attitude Index. Globally, the Eurozone interest rate decision, industrial production, China's CPI and PPI, the U.K. unemployment rate, and industrial production will likely be in focus.

Last week, the Nikkei 225 fell below its assumed range. The upside was about 1,640 yen below our assumption and the downside was about 710 yen below the assumed line.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 36950 yen) on the upside and Bollinger Band -2σ (currently around 33540 yen) on the downside.

This week, the Nikkei 225 is likely to continue its search for a second bottom as fears of a recession hover in the U.S. market and semiconductor-related stock selling continue.

2024年9月1日日曜日

Outlook for the Nikkei average this week [1-September 2024]

[Fundamental viewpoint]

In the U.S. markets last week, stock indices were mixed for the week, with the prospect of a Fed rate cut buying up economically sensitive stocks, while semiconductor-related stocks sold off.

Weekly change NY Dow: +0.94%, NASDAQ: -0.92%, S&P 500: +0.24%.

The difference in the yield spread between the Japanese and U.S. markets is 4.00 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 23.1 and the Nikkei 225's P/E ratio of 15.8, 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 4.00 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 43.1 or if the Nikkei Index is around 105,260yen, the Nikkei Index will be at the same level as the current Nikkei Index price. 66,610yen,

From a fundamental perspective, the Japanese market can be said to be about 66,610 yen less attractive than the U.S. market. Weakness in the Japanese market was magnified last week.

[Conditions for Nikkei average rise]

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

① Rising US market

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

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

④ Upward revision of Japan's 2025 GDP estimate (now +2.9%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① The weekly leg of the NYDow was positive last week. The daily chart is above the 200-day line and above the clouds of the Ichimoku Chart. The NASDAQ's weekly leg was negative last week. The daily chart is above the 200-day line and within the equilibrium cloud. This week, the focus will be on whether or not the NY Dow can keep above the 25-day line.

② As a result of the earnings announcements, the forecasted ROE for the Nikkei 225 index came in at +8.8%, a deterioration of 0.1 percentage points from three months ago. The profit growth rate was +2.1%, an improvement of 1.8 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 narrowed from 2.92 to 3.02, moving the yen against the dollar in the range of ¥143 to ¥146. The dollar index rose +1.05% for the week.

⑤ The third week of August was likely oversold, the fourth week of August was likely overbought, and this week is expected to be overbought. Of the five points last week, ③ was bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 5.3 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2,050 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 4.0 points in the medium to long term (about 1,550 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of U.S. market volatility, declined to a weekly low of 15.0. The Nikkei VI declined to a weekly low of 21.3. The U.S. market is optimistic and the Japanese market is volatile.

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

The Nikkei 225 is under the Ichimoku Kinko Chart's cloud. The Nikkei 225's divergence ratio is +7.5%. The divergence from the 200-day moving average was +3.4% since these tow factors are positive, a “yellow light” has been given to the medium-term trend.

In the U.S. market, the NYDow is above the 9-day, and 25-day lines, and 200-day line. It is above the Ichimoku Chart cloud.

The NASDAQ is below the 9-day, and above 25-day lines, and 200-day line. The NASDAQ is within the Ichimoku Chart cloud.

This is a “yellow signal” in the short term and a “yellow signal” in the medium term.

[Outlook for this week]

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

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

This week, the U.S. market will focus on the August employment report. In addition, the ISM Manufacturing Index for August, the July Job Openings Labor Survey (JOLTS), and the ISM Non-Manufacturing Index for August will be released. Globally, China's PMI, Canada's policy rate, Eurozone retail sales, and GDP will be released.

Last week, the Nikkei 225 remained within the assumed range. The upper price was about 1950 yen below our assumption and the lower price was about 600 yen above the assumed line.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around 40630 yen) on the upside and the 25-day line (currently around 37120 yen) on the downside.

This week will be the week to see if the economic indicators to be released will change the soft landing scenario expected by the market. The Nikkei 225 is expected to continue its upward trend based on the U.S. market indices and currency movements.

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