Thanksgiving is this Thursday in the U.S. and since markets are closed and Japan will have to trade independently of U.S. action on Friday, the latter half of the week may feature light trading and either profit-taking if stocks have rallied or narrow range-bound trading if not. While Barron’s came out with a bullish report saying Japan will rally — there may be a pop Monday and there could be some heavy buying of Japanese stocks, ADRs and funds such as EWJ and the JOF closed-end fund — Japanese investors on the other hand, remain very cautious and hardly bullish.

Subprime continues to worry broadly. Mitsui Sumitomo FG reports earnings on Monday and Mitsubishi UFJ FG reports on Wednesday. While all the bad news including that related to subprime may be priced in, there are virtually no bullish factors to get behind the mega banks.

In general, yes, Japanese stocks are oversold, but given the heavy recent selling by foreign investors, any rally will have to be fueled (and likely will be considering the Barron’s piece) by foreigners, which means Japanese investors will be looking to take profits since they’ve been supporting stocks from falling through 15,000 into levels nobody wants to see tested.

As of Friday’s close, the Nikkei 225 was trading at 1.72x book, 16.3x forward earnings, 17.2x trailing earnings and with a 1.3% forward yield (1.2% trailing yield).

Nikkei 225 futures trading in Chicago gained 5 points to 15,190, trading between 15,105 - 15,250 intra-day, in what was a volatile (but ultimately positive) session for the broader market due to options expiration.