Nikkei update

This is one market I never invest in, not for clients, nor PA. Yes there have been some spectacular bounces but how many false dawns too? How many times do you hear Japanese equity fund managers boldly proclaim that 'this will be the year that we see recovery in Japan'?? I first heard it from and old Save and Prosper fund manager back in 1995! Who would want to be a long only Japan equity fund manager??

Anyway, the chart below shows that the recent support at 9,500 has been punctured, as has the blue bullish support line. The market was down 277 points Friday at 9,408 - this is a 100x3 (ie 300 points) chart so we did not get a 3 box reversal and a new column of 0's. The index is now honing in on the longer term support at 9,100, levels where the market has held on two previous occasions. If that box gets filled, we will have a new double bottom sell signal from the previous column of o's and an activated downside price target of 7,200 (as always, no time horizon for this).

This 9,100 level (shown by the larger red circle) looks very important - expect a battle here between bulls and bears. If we see a drop below it and the 9,000 box gets filled, that would be a bearish development, as those two previous support levels would be punctured.

There is also an activated downside target of 5,900 still in play and an upside target of 14,500 (but that will become invalid if the 9,100 box gets filled). I would suggest more risks to the downside at this particular juncture because the bullish support line has been breached and we now have the more recent bearish resistance line, just my opinion but keep an open mind. Japan - its a 'killer'!