Is the Nikkei Average “close to 30,000 yen divided too”? Be wary of movements from overseas and the Jackson Hole Conference

According to trading trends by investment sector announced by the Japan Exchange Group on the 24th, overseas investors oversold physical stocks worth 741.5 billion yen last week (14-18). Overseas people have oversold for the first time in 8 weeks, and vigilance is spreading. There are market participants who strongly indicate the view that the Nikkei Stock Average will be divided by 30,000 yen in the near future from technical indicators.

In a report on the 22nd, chief equity strategist Ide Shingo of Nissay Research Institute points out that “it seems necessary to anticipate developments where the Nikkei Average will divide 30,000 yen in the near future,” taking into account the fact that the buying momentum of overseas investors has weakened since late June and risks due to the bursting of the “AI bubble” in the US.

Mr. Ide also calls for caution against Fed (US Federal Reserve) Chairman Powell's speech at the Jackson Hole meeting tonight (25th). At the Jackson Hole meeting last year, in response to Mr. Powell's hawkish stance, US stocks fell close to 15% until they hit a low in October. If the market's view on interest rate policy goes against Chairman Powell's will this time, too, I emphasize that “there is also a possibility that the rate of decline in US stocks, which are more expensive than at that time, will exceed 15%.”

Market strategist Nakamura Katsuhiko of Mizuho Securities also predicted that “there are situations where the Nikkei Average will divide 30,000 yen in the next 3 months” (Nihon Keizai Shimbun dated 18th). It is centered around the Tokyo Stock Exchange Stock Price Index (TOPIX), which is stronger than the Nikkei Average, and it is said that if it falls below 2221 points and a trajectory called “double top” is completed, sales into Japanese stocks will gain momentum.

In the Nikkei Average, a “mini dead cross,” where the short-term 5-week moving average line penetrates the 13-week line from top to bottom, has already occurred. It is said that in addition to this dead cross, chief technical analyst Kinouchi Eiji of Daiwa Securities is paying attention to the fact that charts similar to signals appearing on the eve of a historic crash, such as Black Monday in 1987 called “reverse cup with handle,” have appeared.

Senior market analyst Masayuki Doshinoda of Rakuten Securities Research Institute also sounds an alarm about the accelerating decline. In response to Bloomberg's coverage, he said that if the Nikkei Average exceeds the 13-week line, it is easy for the return to continue, but “if it cannot be crossed, there is a possibility that the 13-week line will become a return movement of resistance against the upper price, making it easier for the decline to accelerate.” The weekly chart based on today's 25th closing price could not exceed the 13-week line.

Ahead of the Jackson Hole meeting at night, the Tokyo stock market on the 25th cancelled the rise in high-tech stocks the day before receiving good financial results from the US semiconductor NVIDIA, and the Nikkei Average fell sharply by 662 yen (2.1% lower) from the previous day. Meanwhile, TOPIX, which has a low correlation with high-tech stocks, remained 0.9% lower and was reluctant to decline.