On the Nikkei's Break Below Key Negative Levels

In Asian trading on Friday October 2nd, 2009 the Nikkei 225 broke below two major support levels as the chart above reveals. The index completed its move below all three key moving average levels with a close below the 200 day EMA (the green line on the chart). In addition there is a clear violation of the uptrend line through the lows since the March bottom.

Click to enlarge:

If the yen continues to strengthen against the U.S. dollar, and if U.S. consumers continue to lose jobs, the outlook for the Nikkei increasingly looks like a prolongation of its 20 year bear market.

On the subject of U.S. non-farm payrolls it is worth noting that if the one million plus workers that have "left" the U.S. labor force since May (i.e. they are too discouraged to look for work and drop off the official statistics) were added back into the unemployment figure the U3 percentage would be 10.4%.

For a good discussion of the real way to look at the U.S. employment data the following article is recommended.

Comments

[Michael Clark:]

Clive: I agree, the Nikkei looks terrible. The Housing Index (HGX) and the Utility Index (UTY) are also breaking through support. Charts attached below:

seekingalpha.com/insta...

Oct 04 06:55 AM

[tripleblack:]

Ugh, tough sledding for the Japanese. And I agree, the U3 at 10.4% is the MOST favorable unemployment number I would use, 17% is more like it when including the under-employed, of course.

I wonder what the new Japanese government will do to address their problems?

Oct 04 08:46 PM