Category: Japan & Korea

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Japan, South Korea selling pressure

Dow Jones Japan Index broke support at 4900, warning of another primary decline. 63-Day Twiggs Momentum holding below zero confirms a strong primary down-trend.

Dow Jones Japan Index

* Target calculation: 51 – ( 58 – 51 ) = 64

Dow Jones South Korea Index gapped sharply lower at the open, prompting a brief trading halt on the Korean exchange. 21-day Twiggs Money Flow holding below zero warns of strong (medium-term) selling pressure. Failure of support at 360 would test 330 in the short-term, but the calculated target is 290*.

Dow Jones South Korea Index

* Target calculation: 360 – ( 430 – 360 ) = 290

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Japan & South Korea

Bullish divergence on Japan’s Nikkei 225 index (13-week Twiggs Money Flow) warns of a bear market rally. Breakout above the upper channel of the broadening wedge pattern would confirm. The primary trend, however, remains downward; breakout below the lower channel at 8400 would warn of a down-swing to 7800*.

Nikkei 225 Index

* Target calculation: 8400 – ( 9000 – 8400 ) = 7800

The Seoul Composite is weaker on Wednesday after a sharp rally earlier in the week. 13-Week Twiggs Money Flow continues to threaten a break below zero. Breakout below the lower border of the broadening wedge formation would signal another primary decline.

Seoul Composite Index

* Target calculation: 1650 – ( 1900 – 1650 ) = 1400

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Yen super-trend continues

The dollar continues its downward 30-year super-trend against the yen. The Bank of Japan (BOJ) appears unable to support the dollar at current levels and breakout below ¥80 warns of a decline to ¥70*.

USDJPY

* Target calculation: 80 – ( 90 – 80 ) = 70

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Japan Unveils Measures on Yen Strength – WSJ.com

The government aims to “soften the pain” from the strong yen and keep it from leading to more “hollowing out” of Japanese industry, the plan says. It calls for expanding and extending funds for key industries that create jobs, as well as expanding training for workers and the unemployed.

It also urges expansion of financial support for small- and medium-sized businesses, many of which have been hit hard by the currency’s surge.

The government also revealed measures intended to exploit the strong yen’s merits, implicitly acknowledging the limits on Tokyo’s ability to weaken the currency.

The plan proposes support for Japanese companies conducting mergers and acquisitions overseas, as well as for development of overseas natural resources and energy supplies, which the strong yen could help make cheaper.

Tokyo also wants to make the benefits of the strong yen apparent to consumers in areas such as electricity and gas utility prices, and calls for the implementation of a survey of consumers on the merits of the currency’s rise.

via Japan Unveils Measures on Yen Strength – WSJ.com.

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IMF Survey: Weak and Bumpy Global Recovery Ahead

The risks to the global economy are many, but three in particular demand strong action by policymakers:

• In the euro area, banks must be made stronger, not only to avoid deleveraging and maintain growth, but also, and more importantly, to reduce risks of vicious feedback loops between low growth, weak sovereigns, and weak banks. This requires additional capital buffers, from either private or public sources.

• The top priorities in the United States include devising a medium-term fiscal consolidation plan to put public debt on a sustainable path and to implement policies to sustain the recovery, including by easing the adjustment in the housing and labor markets. The new American Jobs Act would provide needed short-term support to the economy, but it must be flanked with a strong medium-term fiscal plan that raises revenues and contains the growth of entitlement spending.

• In Japan, the government should pursue more ambitious measures to deal with the very high level of public debt while attending to the immediate need for reconstruction and development in the areas hit by the earthquake and tsunami.

via IMF Survey: Weak and Bumpy Global Recovery Ahead.

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Weak Asian markets warn of continued selling pressure

Dow Jones Japan Index is testing long-term support at 50.00. 13-Week Twiggs Money Flow oscillating around zero indicates uncertainty; reversal below zero would warn of rising selling pressure. Breakout below 4800 would offer a target of 35.00*.

Dow Jones Japan Index

* Target calculation: 50 – ( 65 – 50 ) = 35

The Nikkei 225 Index is headed for a test of 7000* after breaking support at 9000 on the weekly chart.

Nikkei 225 Index

* Target calculation: 9000 – ( 11000 – 9000 ) = 7000

Dow Jones South Korea Index is consolidating between 360 and 410 on the daily chart. 21-Day Twiggs  Money Flow below zero warns of strong medium-term selling pressure. Downward breakout would offer a target of 290*.

Dow Jones South Korea Index

* Target calculation: 360 – ( 430 – 360 ) = 290

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Nikkei breaks support

Japan’s Nikkei 225 Index broke support at 8600, signaling a down-swing to test the 2009 low of 7000*. 13-Week Twiggs Money Flow respect of the zero line warns of selling pressure.

Nikkei 225 Index

* Target calculation: 8600 – ( 10200 – 8600 ) = 7000

South Korea’s Seoul Composite Index fared better, consolidating between 1700 and 1900. Failure of support is more likely (this is a bear market) and would offer a target of 1500*.

Seoul Composite Index

* Target calculation: 1700 – ( 1900 – 1700 ) = 1500

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DJ Japan selling pressure

DJ Japan Index is headed for another test of support at 49.50. 21-Day Twiggs Money Flow peaking below zero warns of strong selling pressure. Breach of support would offer a target of 45.50*.

Dow Jones Japan Index

* Target calculation: 49.50- ( 53.50 – 49.50 ) = 45.50

DJ South Korea also displays a strong primary down-trend. Breach of support at 365 would offer a target of 300*.

Dow Jones South Korea Index

* Target calculation: 365 – ( 430 – 365 ) = 300

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