NI 225: JAPANESE STOCK MARKET REMAINS IN CORRECTION

Current trend

The leading Japanese stock index NI 225 is correcting near the 38728.0 mark. Investors are monitoring the corporate reporting of the main components, but so far the incoming information is mostly weak, which is the main reason for the stagnation of the stock market.

At the end of last week, the automobile company Mitsubishi Corp. reported revenue of 4.862 trillion yen, significantly lower than the projected 5.487 trillion yen and 5.287 trillion yen recorded a year earlier. Earnings per share (EPS) adjusted to 81.13 yen from 52.11 yen, with expectations at 87.39 yen.

Sumitomo Corp. reported significantly better, showing revenue at 1.846 trillion yen after 1.747 trillion yen in the same period a year earlier, while analysts expected 1.399 trillion yen. EPS were 66.21 yen, down from 81.29 yen and below preliminary estimates of 92.41 yen.

Meanwhile, the bond market continues its uptrend: 10-year securities are holding at a yield of 0.880%, which corresponds to the indicator a week earlier of 0.879%, and 20-year bonds are trading at a rate of 1.675%, exceeding the 1.667% recorded last week.   

The growth leaders in the index are Fujikura Ltd. ( 5.40%), Rakuten Inc. ( 5.04%), Dainippon Screen Mfg. Co., Ltd. ( 5.11%), Nomura Holdings Inc. ( 4.84%).

Among the leaders of the decline are Sumitomo Dainippon Pharma Co., Ltd. (-3.49%), Daiichi Sankyo Co., Ltd. (-3.49%), Sony Corp. (-3.18%).

Support and resistance

On the D1 chart, the price moves away from the support line of the ascending channel 40600.0–37100.0.

Technical indicators are preparing to reverse around and issue a new buy signal: the AO histogram is forming ascending bars, and the fast EMAs on the Alligator indicator is approaching the signal line, narrowing the range of fluctuations.

Support levels: 38300.0, 37080.0.

Resistance levels: 39070.0, 40300.0.

Trading tips

In case of continued growth of the asset, as well as consolidation above the resistance level of 39070.0, buy positions with the target of 40300.0 may be opened. Stop-loss – 38500.0. Implementation time: 7 days and more.

In the event of a reversal and continued decline of the asset, as well as price consolidation below the support level of 38300.0, sell positions with the target of 37080.0 can be opened. Stop-loss – 38500.0.