Outlook for the Nikkei average this week [31-May-2020]

[Present state recognition of fundamental]

Last week in the U.S. market, stock indices were boosted by buying on hopes of a new Corona vaccine development and a resumption of economic activity. On the other hand, in the medium to long term, the spread of new types of pneumonia, an inward political situation centered on the world's own country, a lack of creditworthiness and credit crunch of banks, a slowdown in China and other economies, a fear of a slowdown in the global economy due to trade wars, etc. The geopolitical risks of the Middle East, the Korean Peninsula and Ukraine need continued attention.

The difference in yield spreads between the Japanese and US markets is 0.07 points lower than the Japanese market, considering the announced OECD real GDP forecast for 2021. The reason for the undervaluation is the difference between the P/E of the S&P500 at 23.8 and the expected P/E of 20.6 of the Nikkei 225 stocks for the current fiscal year, as well as the difference between Japanese and U.S. interest rates and GDP growth.

This means that if the difference in the GDP growth rate between Japan and the U.S. in 2021 is further reduced by 0.03% compared to the OECD forecast (Japan is revised upward or the U.S. is revised downward), or if the PER of the Nikkei 225 stocks for the current term is around 20.9, or if the Nikkei 225 is around 22200 yen, the Japanese market is undervalued by 320 yen in the medium to long term.

[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 UP of expected profit increase rate for the current term more than before

③ Expansion of the interest rate differential between Japan and the US and further depreciation of the yen

④ Upward revision of Japan's 2021 GDP estimate (now +0.74%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow weekly trend was positive. The daily is below the 200-day line and above the clouds of the Ichimoku equilibrium table, while the weekly NASDAQ is now in the crosshairs. The daily leg is above the 200-day line and above the clouds of the Ichimoku equilibrium table. This week, all eyes will be on the housing index, the quarterly earnings release, the ISM manufacturing index for May, and the employment statistics for May. I would like to pay attention to whether NYDow can keep above the 25th day line.

② The forecasted profit growth rate for the Nikkei 225 stocks is ROE forecast 5.2%, 2.6 points worse than three months ago, due to the announcement of the latest quarterly financial results. Earnings forecast for this term is -16.0%, 13.3 points worse than three months ago.

③ Although long-term interest rates in the U.S. declined and the difference between the U.S. and Japanese interest rates narrowed from 0.68% to 0.66%, the yen weakened at the 107-yen level.

④ The real GDP growth rate forecast for 2021 in Japan and the United States of OECD was announced, Japan is expected to be + 0.74%, and the United States is expected to be + 1.98%.

⑤ The 3rd week of May is a over buying. there is a high possibility that the 4th week of May is a over buying, and this week we are forecasting to over buying.

last week, ①,③ were bullish factors. It seems that ①,②,③,⑤ will be affected this week.

[Technical viewpoint]

Looking at the Japanese market from a technical standpoint, the 200-day deviation from the NASDAQ is 9.9 points (2170 yen when calculated to the Nikkei 225) undervalued in the medium to long term. The undervalue narrowed compared to last week.

The Nikkei is above the clouds of the Ichimoku Kinko table. The overall deviation rate was +17.0%, a positive turnaround from the previous week. The 200-day moving average deviation rate was +1.0%, a positive turnaround from the previous week. As the three factors are positve, the mid-term trend is lit with a "green signal". The Nikkei average is above the 25_day moving average line and the 9_day moving average line,  "green signal " is lit for short-term trends.

In the US market NY Dow is under the 200_day line but above the 25_day line and the 9_day line. It is above the cloud of ichimoku table. NASDAQ is above the 200_day average line and the 25_day average line and the 9_day average line. It is above the cloud of the ichimoku table. In the short term "green signal" is lit and in the medium term " yellow signal" is lit.

[Outlook for this week]

Looking at the US market fundamentally, concerns such as interest rate hikes in the United States, US-China trade friction, US political uncertainty, North Korea issues are receding However, Spread of pneumonia infection by new coronavirus, falling crude oil prices, worsening U.S. corporate earnings, falling high yield bond markets , global long-term interest rate decline trend, financial market turmoil caused by credit slumps, lack of creditworthiness and political situation of EU banks, global economic slowdown concern with trade war, geopolitical risk of the Middle East and Ukraine Etc exist as a risk factor.

Real estate prices in China are flat in large cities, but the problems of nonperforming loans in China as a whole such as excessive facilities have not been resolved. If you hurry up the process, it will lead to a short-term market drop, and if you delay proceeding, there is concern that the economic recession will be prolonged.

In addition, although the LIBOR interest rate has recently been declining, in March, the LIBOR interest rate has risen despite a decline in short-term interest rates, so there is a concern that financial instability may recur.

On the other hand, good news is the US zero interest rate policy, the Fed's direct financial support to companies including the purchase of junk bonds, economic measures of $ 2 trillion, and President Trump's policy expectations, monetary easing measures such as the Bank of Japan's 2% inflation target, the introduction of negative interest rates and the purchase of 80 trillion Japanese government bonds and 12 trillion yen in ETFs, as well as expectations for economic measures by the Japanese government that exceed the level of the Lehman Shock, large-scale economic measures by the EU countries, and the ECB's announcement of deepening negative interest rates and expanding quantitative easing.

Looking at the technical aspect, the US market is no trend in the medium-term, and upward trend in the short term. The Japanese market is upward trend in the medium-term, and upward trend in the short term.

An analysis of the currency market last week showed that although U.S. long-term interest rates fell and the gap between U.S. and Japanese long-term interest rates narrowed

The currency moved in the direction of a weaker yen. This week is expected to be in the 107 to 108 yen range.

From now on, we need to pay attention to technical indicators, US market trends, exchange rate movements, and foreign investor trends.

Last week, the Nikkei 225 was above its expected range. The upper price was about 420 yen above the assumed line and the lower price was about 640 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ +500 yen (currently around 22240) and the Bollinger Band +1σ (currently around 21000).

Outlook for the Nikkei average this week [24-May-2020]

[Present state recognition of fundamental]

Last week in the U.S. market, stock indices were boosted by buying on hopes of a resumption of economic activity. On the other hand, in the medium to long term, the spread of new types of pneumonia, an inward political situation centered on the world's own country, a lack of creditworthiness and credit crunch of banks, a slowdown in China and other economies, a fear of a slowdown in the global economy due to trade wars, etc. The geopolitical risks of the Middle East, the Korean Peninsula and Ukraine need continued attention.

Considering the announced 2021 OECD real GDP forecast, the difference in yield spread between the US and Japan is higher by 0.4 points in the Japanese market. The reason for the high price is due to the difference between the S & P 500 PER of 23.2 and the forecast PER of the Nikkei 225 stocks for the current term, 22.1, the interest rate differential between Japan and the US, and the GDP growth rate difference.

This is because the difference in GDP growth rates between Japan and the United States in 2021 will shrink by 0.4% compared to the OECD forecast value (Japan will be revised upward or the US will be revised downward) relative to the current Nikkei average price, or if the forecast PER of Nikkei 225 stocks for the current term is about 20.5 (either the current term's performance is revised upward or the Nikkei average is about 18910 yen), it can be interpreted that the US-Japan market is in equilibrium. In the long run, the Japanese market is about 1480 yen more expensive.

[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 UP of expected profit increase rate for the current term more than before

③ Expansion of the interest rate differential between Japan and the US and further depreciation of the yen

④ Upward revision of Japan's 2021 GDP estimate (now +0.74%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow weekly foot was positive. The daily bar is under the 200 day line, and it is above the cloud of the ichimoku table. Nasdaq weekly foot was positive. NASDAQ bar is above the 200-day line and it is above the cloud of the ichimoku table. This week we will be paying attention to Housing related indicators, Quarterly financial results announcement , New unemployment insurance claims per week, Durable Goods Orders in April. I would like to pay attention to whether NYDow can keep above the 25th day line.

② The forecasted profit growth rate for the Nikkei 225 stocks is ROE forecast 4.5%, 4.8 points worse than three months ago, due to the announcement of the latest quarterly financial results. Earnings forecast for this term is -31.2%, 47.1 points worse than three months ago.

③ Long-term interest rates in the U.S. rose and the difference between the U.S. and Japanese interest rates widened from 0.66% to 0.68%, and the yen weakened from the 107-yen level to the 108-yen level.

④ The real GDP growth rate forecast for 2021 in Japan and the United States of OECD was announced, Japan is expected to be + 0.74%, and the United States is expected to be + 1.98%.

⑤ The 2nd week of May is a over selling. there is a high possibility that the 3rd week of May is a over selling, and this week we are forecasting to over selling.

last week, ① was a bearish factor. It seems that ①,②,③,⑤ will be affected this week.

[Technical viewpoint]

From the technical viewpoint of the Japanese market, the 200-day divergence rate difference with NASDAQ is 15.3 points lower than NASDAQ in the medium to long term. (It is about 3110 yen when it is based on the Nikkei average)  Proportions expanded compared to last week.

The Nikkei is above the clouds of the Ichimoku Kinko table. The overall divergence rate was -3.3%, a narrower range than last week. The 200-day moving average divergence rate narrowed to -5.9%. As the tow factors are negative, the mid-term trend is lit with a "yellow signal". The Nikkei average is above the 25_day moving average line and the 9_day moving average line,  "green signal " is lit for short-term trends.

In the US market NY Dow is under the 200_day line but above the 25_day line and the 9_day line. It is above the cloud of ichimoku table. NASDAQ is above the 200_day average line and the 25_day average line and the 9_day average line. It is above the cloud of the ichimoku table. In the short term "green signal" is lit and in the medium term " yellow signal" is lit.

[Outlook for this week]

Looking at the US market fundamentally, concerns such as interest rate hikes in the United States, US-China trade friction, US political uncertainty, North Korea issues are receding However, Spread of pneumonia infection by new coronavirus, falling crude oil prices, worsening U.S. corporate earnings, falling high yield bond markets , global long-term interest rate decline trend, financial market turmoil caused by credit slumps, lack of creditworthiness and political situation of EU banks, global economic slowdown concern with trade war, geopolitical risk of the Middle East and Ukraine Etc exist as a risk factor.

Real estate prices in China are flat in large cities, but the problems of nonperforming loans in China as a whole such as excessive facilities have not been resolved. If you hurry up the process, it will lead to a short-term market drop, and if you delay proceeding, there is concern that the economic recession will be prolonged.

In addition, although the LIBOR interest rate has recently been declining, in March, the LIBOR interest rate has risen despite a decline in short-term interest rates, so there is a concern that financial instability may recur.

On the other hand, good news is the US zero interest rate policy, the Fed's direct financial support to companies including the purchase of junk bonds, economic measures of $ 2 trillion, and President Trump's policy expectations, monetary easing measures such as the Bank of Japan's 2% inflation target, the introduction of negative interest rates and the purchase of 80 trillion Japanese government bonds and 12 trillion yen in ETFs, as well as expectations for economic measures by the Japanese government that exceed the level of the Lehman Shock, large-scale economic measures by the EU countries, and the ECB's announcement of deepening negative interest rates and expanding quantitative easing.

Looking at the technical aspect, the US market is no trend in the medium-term, and upward trend in the short term. The Japanese market is no trend in the medium-term, and upward trend in the short term.

Analyzing the currency market last week, long-term interest rates in the U.S. rose, the gap between U.S. and Japanese long-term interest rates widened, and the currency moved toward a weaker yen. This week is expected to be in the 107 to 108 yen range. From now on, we need to pay attention to technical indicators, US market trends, exchange rate movements, and foreign investor trends.

Last week, the Nikkei 225 stayed within its expected range. The upper price was about 110 yen below the assumed line and the lower price was about 290 yen above the assumed line. This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ yen (currently around 20760 yen) and the 25-day line (currently around 1,900 yen).

Outlook for the Nikkei average this week [17-May-2020]

[Present state recognition of fundamental]

In the US market last week, the stock market index fell due to the growing concern about the second wave of the spread of infection. On the other hand, in the medium to long term, the spread of new types of pneumonia, an inward political situation centered on the world's own country, a lack of creditworthiness and credit crunch of banks, a slowdown in China and other economies, a fear of a slowdown in the global economy due to trade wars, etc. The geopolitical risks of the Middle East, the Korean Peninsula and Ukraine need continued attention.

Considering the announced 2021 OECD real GDP forecast, the difference in yield spread between the US and Japan is higher by 1.35 points in the Japanese market. The reason for the high price is due to the difference between the S & P 500 PER of 22.7 and the forecast PER of the Nikkei 225 stocks for the current term, 27.5, the interest rate differential between Japan and the US, and the GDP growth rate difference.

This is because the difference in GDP growth rates between Japan and the United States in 2021 will shrink by 1.4% compared to the OECD forecast value (Japan will be revised upward or the US will be revised downward) relative to the current Nikkei average price, or Or, if the forecast PER of Nikkei 225 stocks for the current term is about 20.5 (either the current term's performance is revised upward or the Nikkei average is about 14610 yen), it can be interpreted that the US-Japan market is in equilibrium. In the long run, the Japanese market is about 5430 yen more expensive.

[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 UP of expected profit increase rate for the current term more than before

③ Expansion of the interest rate differential between Japan and the US and further depreciation of the yen

④ Upward revision of Japan's 2021 GDP estimate (now +0.74%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow weekly foot was negative. The daily bar is under the 200 day line, and it is above the cloud of the ichimoku table. Nasdaq weekly foot was negative. NASDAQ bar is above the 200-day line and it is above the cloud of the ichimoku table. This week we will be paying attention to Housing related indicators, Quarterly financial results announcement , New unemployment insurance claims per week, Philadelphia Fed Index for May. I would like to pay attention to whether NYDow can return above the 25th day line.

② The forecasted profit growth rate for the Nikkei 225 stocks is ROE forecast 3.5%, 4.1 points worse than three months ago, due to the announcement of the latest quarterly financial results. Earnings forecast for this term is -54.2%, 41.8 points worse than three months ago.

③Although long-term interest rates in the United States declined and the interest rate differential between Japan and the US narrowed from 0.69% to 0.66%, the yen was depreciating from the 106 yen level to the 107 yen level.

④ The real GDP growth rate forecast for 2021 in Japan and the United States of OECD was announced, Japan is expected to be + 0.74%, and the United States is expected to be + 1.98%.

⑤ The 1st week of May is a over selling. there is a high possibility that the 2nd week of May is a over selling, and this week we are forecasting to over selling.

last week, ① was a bearish factor. It seems that ①,②,③,⑤ will be affected this week.

[Technical viewpoint]

From the technical viewpoint of the Japanese market, the 200-day divergence rate difference with NASDAQ is 13.8 points lower than NASDAQ in the medium to long term. (It is about 2770 yen when it is based on the Nikkei average)  Proportions shrank compared to last week.

The Nikkei is in the clouds in the Ichimoku Kinko table. The overall divergence rate was -8.3%, a narrower range than last week. The 200-day moving average divergence rate narrowed to -7.6%. As the tow factors are negative, the mid-term trend is lit with a "yellow signal". The Nikkei average is above the 25_day moving average line but under the 9_day moving average line,  "yellow signal " is lit for short-term trends.

In the US market NY Dow is under the 200_day line and the 25_day line and the 9_day line. It is in the cloud of ichimoku table. NASDAQ is above the 200_day average line and the 25_day average line and the 9_day average line. It is above the cloud of the ichimoku table. In the short term "yellow signal" is lit and in the medium term " yellow signal" is lit.

[Outlook for this week]

Looking at the US market fundamentally, concerns such as interest rate hikes in the United States, US-China trade friction, US political uncertainty, North Korea issues are receding However, Spread of pneumonia infection by new coronavirus, falling crude oil prices, worsening U.S. corporate earnings, falling high yield bond markets , global long-term interest rate decline trend, financial market turmoil caused by credit slumps, lack of creditworthiness and political situation of EU banks, global economic slowdown concern with trade war, geopolitical risk of the Middle East and Ukraine Etc exist as a risk factor.

Real estate prices in China are flat in large cities, but the problems of nonperforming loans in China as a whole such as excessive facilities have not been resolved. If you hurry up the process, it will lead to a short-term market drop, and if you delay proceeding, there is concern that the economic recession will be prolonged.

In addition, although the LIBOR interest rate has recently been declining, in March, the LIBOR interest rate has risen despite a decline in short-term interest rates, so there is a concern that financial instability may recur.

On the other hand, good news is the US zero interest rate policy, the Fed's direct financial support to companies including the purchase of junk bonds, economic measures of $ 2 trillion, and President Trump's policy expectations, monetary easing measures such as the Bank of Japan's 2% inflation target, the introduction of negative interest rates and the purchase of 80 trillion Japanese government bonds and 12 trillion yen in ETFs, as well as expectations for economic measures by the Japanese government that exceed the level of the Lehman Shock, large-scale economic measures by the EU countries, and the ECB's announcement of deepening negative interest rates and expanding quantitative easing.

Looking at the technical aspect, the US market is no trend in the medium-term, and upward trend in the short term. The Japanese market is no trend in the medium-term, and upward trend in the short term.

Analyzing the foreign exchange market last week, long-term interest rates in the United States fell and the long-term interest rate differential between Japan and the US narrowed, but the yen moved toward a weaker yen.

This week, we expect prices in the 107 to 105 yen range. From now on, we need to pay attention to technical indicators, US market trends, exchange rate movements, and foreign investor trends.

The Nikkei average for last week was below the expected range. The upper price fell below the assumed line by about 680 yen, and the lower price fell below the assumed line by about 240 yen. The expected range for this week's Nikkei average is the Bollinger Bands + 2σ + 200 yen (currently around 20680 yen) and the movement between the 25th line (currently around 19660 yen).

Outlook for the Nikkei average this week [10-May-2020]

[Present state recognition of fundamental]

In the US market last week, the stock market index rose as economic activity restrictions began to be relaxed in many US states. On the other hand, in the medium to long term, the spread of new types of pneumonia, an inward political situation centered on the world's own country, a lack of creditworthiness and credit crunch of banks, a slowdown in China and other economies, a fear of a slowdown in the global economy due to trade wars, etc. The geopolitical risks of the Middle East, the Korean Peninsula and Ukraine need continued attention.

The difference in the yield spread between the US and Japanese markets is 0.92 points less than in the Japanese market, taking into account the 2021 OECD's real GDP forecast announced. The reason for the bargain is due to the difference between S&P500 's PER of 22.8 and the Nikkei average adopted stock price PER 15.6 and Japan-US interest rate difference, GDP growth difference. This is because the difference in GDP growth between Japan and the US in 2020 is 0.9% more than the OECD forecast (Japan will downgrade or US will be revised upward) against the current Nikkei average price, or it can be interpreted that the Japanese-U.S. Market will be in equilibrium, because the expected PER of the Nikkei average hires will be around 20.2 (the results for the current term will be revised downwards or the Nikkei average will be around 23950 yen) . In the medium to long term, the Japanese market is low valued at about 3770 yen.

[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 UP of expected profit increase rate for the current term more than before

③ Expansion of the interest rate differential between Japan and the US and further depreciation of the yen

④ Upward revision of Japan's 2021 GDP estimate (now +0.74%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow weekly foot was positive. The daily bar is under the 200 day line, and it is above the cloud of the ichimoku table. Nasdaq weekly foot was positive. NASDAQ bar is above the 200-day line and it is above the cloud of the ichimoku table. This week we will be paying attention to Housing related indicators, Quarterly financial results announcement , New unemployment insurance claims per week, New York Fed index for May. I would like to pay attention to whether NYDow can keep above the 25th day line.

② The forecasted profit growth rate for the Nikkei 225 stocks is ROE forecast 5.7%, 2.4 points worse than three months ago, due to the announcement of the latest quarterly financial results. Earnings forecast for this term is -29.3%, 24.6 points worse than three months ago.

③ Although long-term interest rates in the United States rose and the interest rate differential between Japan and the US widened from 0.65% to 0.69%, the yen remained strong from the 107 yen level to the 105 yen level.

④ The real GDP growth rate forecast for 2021 in Japan and the United States of OECD was announced, Japan is expected to be + 0.74%, and the United States is expected to be + 1.98%.

⑤ The 5th week of April is a over selling. there is a high possibility that the 1st week of May is a over buying, and this week we are forecasting to over buying.

last week, ① was a bullish factor. It seems that ①,②,③,⑤ will be affected this week.

[Technical viewpoint]

From the technical viewpoint of the Japanese market, the 200-day divergence rate difference with NASDAQ is 14.9 points lower than NASDAQ in the medium to long term. (It is about 3010 yen when it is based on the Nikkei average)  Proportions expanded compared to last week.

The Nikkei is in the clouds in the Ichimoku Kinko table. The overall divergence rate was -5.5%, a narrower range than last week. The 200-day moving average divergence rate narrowed to -7.1%. As the tow factors are negative, the mid-term trend is lit with a "yellow signal". The Nikkei average is above the 25_day moving average line and the 9_day moving average line,  "green signal " is lit for short-term trends.

In the US market NY Dow is under the 200_day line and the 9_day line but above the 25_day line. It is in the cloud of ichimoku table. NASDAQ is above the 200_day average line and the 25_day average line but the 9_day average line. It is above the cloud of the ichimoku table. In the short term "yellow signal" is lit and in the medium term " yellow signal" is lit.

[Outlook for this week]

Looking at the US market fundamentally, concerns such as interest rate hikes in the United States, US-China trade friction, US political uncertainty, North Korea issues are receding However, Spread of pneumonia infection by new coronavirus, falling crude oil prices, worsening U.S. corporate earnings, falling high yield bond markets , global long-term interest rate decline trend, financial market turmoil caused by credit slumps, lack of creditworthiness and political situation of EU banks, global economic slowdown concern with trade war, geopolitical risk of the Middle East and Ukraine Etc exist as a risk factor.

Real estate prices in China are flat in large cities, but the problems of nonperforming loans in China as a whole such as excessive facilities have not been resolved. If you hurry up the process, it will lead to a short-term market drop, and if you delay proceeding, there is concern that the economic recession will be prolonged.

In addition, although the LIBOR interest rate has recently been declining, in March, the LIBOR interest rate has risen despite a decline in short-term interest rates, so there is a concern that financial instability may recur.

On the other hand, good news is the US zero interest rate policy, the Fed's direct financial support to companies including the purchase of junk bonds, economic measures of $ 2 trillion, and President Trump's policy expectations, monetary easing measures such as the Bank of Japan's 2% inflation target, the introduction of negative interest rates and the purchase of 80 trillion Japanese government bonds and 12 trillion yen in ETFs, as well as expectations for economic measures by the Japanese government that exceed the level of the Lehman Shock, large-scale economic measures by the EU countries, and the ECB's announcement of deepening negative interest rates and expanding quantitative easing.

Looking at the technical aspect, the US market is no trend in the medium-term, and upward trend in the short term. The Japanese market is no trend in the medium-term, and upward trend in the short term.

Analyzing the foreign exchange market last week, the long-term interest rates in the US rose and the long-term interest rate differential between the US and Japan widened, but the yen remained strong.

This week, we expect prices in the 107 to 105 yen range. From now on, we need to pay attention to technical indicators, US market trends, exchange rate movements, and foreign investor trends.

The Nikkei 225 last week remained within the expected range. The upper price fell about 340 yen below the assumed line, and the lower price exceeded the assumed line by about 220 yen. As for the expected range of this week's Nikkei average, the upside is the Bollinger band + 3σ (currently around 21,150 yen) and the movement between Bollinger band + 1σ (currently around 19990 yen) is expected.

Outlook for the Nikkei average this week [3-May-2020]

[Present state recognition of fundamental]

In the US market last week, the stock market index fell due to concerns over a new US-China friction due to a pandemic's pursuit of responsibility. On the other hand, in the medium to long term, the spread of new types of pneumonia, an inward political situation centered on the world's own country, a lack of creditworthiness and credit crunch of banks, a slowdown in China and other economies, a fear of a slowdown in the global economy due to trade wars, etc. The geopolitical risks of the Middle East, the Korean Peninsula and Ukraine need continued attention.

The difference in the yield spread between the US and Japanese markets is 1.22 points less than in the Japanese market, taking into account the 2021 OECD's real GDP forecast announced. The reason for the bargain is due to the difference between S&P500 's PER of 21.8 and the Nikkei average adopted stock price PER 15.6 and Japan-US interest rate difference, GDP growth difference. This is because the difference in GDP growth between Japan and the US in 2020 is 1.2% more than the OECD forecast (Japan will downgrade or US will be revised upward) against the current Nikkei average price, or it can be interpreted that the Japanese-U.S. Market will be in equilibrium, because the expected PER of the Nikkei average hires will be around 19.3 (the results for the current term will be revised downwards or the Nikkei average will be around 24220 yen) . In the medium to long term, the Japanese market is low valued at about 4600 yen.

[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 UP of expected profit increase rate for the current term more than before

③ Expansion of the interest rate differential between Japan and the US and further depreciation of the yen

④ Upward revision of Japan's 2021 GDP estimate (now +0.74%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

① Last week's NYDow weekly foot was negative. The daily bar is under the 200 day line, and it is in the cloud of the ichimoku table. Nasdaq weekly foot was negative. NASDAQ bar is above the 200-day line and it is above the cloud of the ichimoku table. This week we will be paying attention to Housing related indicators, Quarterly financial results announcement , April ISM Non-Manufacturing Index, April Employment Statistics. I would like to pay attention to whether NYDow can keep above the 25th day line.

② The forecasted profit growth rate for the Nikkei 225 stocks is ROE forecast 5.7%, 2.1 points worse than three months ago, due to the announcement of the latest quarterly financial results. Earnings forecast for this term is -30.3%, 21.3 points worse than three months ago.

③ Although long-term interest rates in the United States rose and the interest rate differential between Japan and the US widened from 0.63% to 0.65%, the yen remained strong from the 107 yen level to the 106 yen level.

④ The real GDP growth rate forecast for 2021 in Japan and the United States of OECD was announced, Japan is expected to be + 0.74%, and the United States is expected to be + 1.98%.

⑤ The 4th week of April is a over selling. there is a high possibility that the 5th week of April is a over selling, and this week we are forecasting to over selling.

last week, ① was a bearish factor. It seems that ①,②,③,⑤ will be affected this week.

[Technical viewpoint]

From the technical viewpoint of the Japanese market, the 200-day divergence rate difference with NASDAQ is 11.7 points lower than NASDAQ in the medium to long term. (It is about 2300 yen when it is based on the Nikkei average)  Proportions shrank compared to last week.

The Nikkei is in the clouds in the Ichimoku Kinko table. The overall divergence rate was -14.0%, a narrower range than last week. The 200-day moving average divergence rate narrowed to -9.8%. As the tow factors are negative, the mid-term trend is lit with a "yellow signal". The Nikkei average is above the 25_day moving average line and the 9_day moving average line,  "green signal " is lit for short-term trends.

In the US market NY Dow is under the 200_day line and the 9_day line but above the 25_day line. It is in the cloud of ichimoku table. NASDAQ is above the 200_day average line and the 25_day average line but the 9_day average line. It is above the cloud of the ichimoku table. In the short term "yellow signal" is lit and in the medium term " yellow signal" is lit.

[Outlook for this week]

Looking at the US market fundamentally, concerns such as interest rate hikes in the United States, US-China trade friction, US political uncertainty, North Korea issues are receding However, Spread of pneumonia infection by new coronavirus, falling crude oil prices, worsening U.S. corporate earnings, falling high yield bond markets , global long-term interest rate decline trend, financial market turmoil caused by credit slumps, lack of creditworthiness and political situation of EU banks, global economic slowdown concern with trade war, geopolitical risk of the Middle East and Ukraine Etc exist as a risk factor.

Real estate prices in China are flat in large cities, but the problems of nonperforming loans in China as a whole such as excessive facilities have not been resolved. If you hurry up the process, it will lead to a short-term market drop, and if you delay proceeding, there is concern that the economic recession will be prolonged.

In addition, although LIBOR interest rates have been declining recently, LIBOR interest rates have risen in the past two months despite the decline in short-term interest rates, and we are aware of the possibility of financial instability recurrence.

On the other hand, good news is the US zero interest rate policy, the Fed's direct financial support to companies including the purchase of junk bonds, economic measures of $ 2 trillion, and President Trump's policy expectations, monetary easing measures such as the Bank of Japan's 2% inflation target, the introduction of negative interest rates and the purchase of 80 trillion Japanese government bonds and 12 trillion yen in ETFs, as well as expectations for economic measures by the Japanese government that exceed the level of the Lehman Shock, large-scale economic measures by the EU countries, and the ECB's announcement of deepening negative interest rates and expanding quantitative easing.

Looking at the technical aspect, the US market is no trend in the medium-term, and no trend in the short term. The Japanese market is no trend in the medium-term, and upward trend in the short term.

Analyzing the foreign exchange market last week, the long-term interest rates in the US rose and the long-term interest rate differential between the US and Japan widened, but the yen remained strong.

This week, we expect prices in the 107 to 105 yen range. From now on, we need to pay attention to technical indicators, US market trends, exchange rate movements, and foreign investor trends.

Last week's Nikkei average was above the expected range. The upper price exceeded the assumed line by about 150 yen, and the lower price exceeded the assumed line by about 910 yen. As for the expected range of this week's Nikkei average, the upper price is the Bollinger band + 2σ (currently around 20400 yen) and the lower value is expected to move between the 25th line (currently around 19220 yen).