The Nikkei recovered 16,000 intra-week last week, but fell back towards the 15,500 level by Friday in an event-heavy week. It seems unlikely the N225 will re-test 16,000 this week as trading slows ahead of the Christmas holiday in the U.S.


As of Friday’s close, the Nikkei 225 was trading at 1.75x book, 17.5x trailing earnings, 16.5x forward earnings and had a yield of 1.2% trailing and 1.3% forward.

N225 March contracts trading in Chicago lost 175 points (-1.1%) to 15,490, which was 80 points lower than Osaka.

The 25-DMA A/D readings for benchmark indices are markedly improved and somewhat misleading. TOPIX 1st section was at 94% with other indices ranging from 81 (HERCULES and Osaka 2) to 91 for Osaka 1st section.

The Bank of Japan is holding a rate decision meeting on Wed. the 19th and Thurs. the 20th with its decision due out the 20th. The BoJ is handcuffed and can’t conceivably raise rates — its last hike was in February.

The U.S. subprime mortgage mess with its negative impact on the global credit market and also fueling concerns of a U.S. economy slowdown, continues to loom over Japanese equities. Somewhat interestingly, the yen has been weakening, which seems to support the idea that the Nikkei 225 has support at 15,000. However, the upside is capped at present by a lack of bullish factors including a decreased presence among foreign investors over the holidays.