The market blasted higher out of the gate yesterday. Although it
moved (painfully) sideways with almost no activity for the rest of the
session. The rally was mainly bolstered by energy and industrial stocks.
And strangely, financial stocks lagged the rally despite the bullish
session last week Friday.
Although most indices were up well over a percent, some two percent, volume was dreadfully low. Additionally, the bears held SPX 1301 resistance, but may have lost 1280 in the ascent.
Today there is almost no news. Libya, Middle East and Japan still rule the headlines, and they should, but very limited updates are available. The only news, and it was also good news, was Japan's Nikkei index climbed another 4% this morning.
The Nikkei setup actually looks great. After the index dropped down to 8227 last week, it quickly recovered the next day, and formed a bullish harami, to close at 9200. The harami candle is a candle that resides entirely within the previous day candle. The candle is successful as a reversal pattern because it negates the prior day's price movement, which signals a reversal in sentiment and as a result price.
The candle signals that the preexisting trend ran out of steam and that a reversal in price is near. The harami candlestick is one of the most basic technical patterns. For more information about basic technical analysis and how to use harami candles to identify trend, check out the instructional video, “Introduction to Recognizing Reversals in Trend”.CLICK HERE.
The Nikkei has continued to follow through and move higher, but the big test will come at 9600, which if the Nikkei started a bearish trend, it would find immediate and staunch resistance. But if a bullish trend is beginning, the index would rise to 10000 before any major selling pressure ensues.
Psychologically, the market wants to go higher. Even during the first hours of Japan's crisis, people were calling in asking,”when should we buy Japanese stock.” In fact, Japan was the only global index to post a net positive inflow last week.
Other than a few etfs, there are not many options to U.S. investors who want to invest in Japanese related stock. But Morgan Stanley came out with a great one page summery of alternative assets, in case you want to allocate your money into Japan.
Both Honda HMC and Toyota TM look appealing. But similar to the U.S. indices, I would prefer they consolidate more (and at lower levels) before resumption of the bullish trend (long-term) begins. HMC should find resistance at $40.75 while TM should see selling pick up at $87. In both stocks, last week's lows should provide ample support over the next few months.
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Today there is almost no news. Libya, Middle East and Japan still rule the headlines, and they should, but very limited updates are available. The only news, and it was also good news, was Japan's Nikkei index climbed another 4% this morning.
The Nikkei setup actually looks great. After the index dropped down to 8227 last week, it quickly recovered the next day, and formed a bullish harami, to close at 9200. The harami candle is a candle that resides entirely within the previous day candle. The candle is successful as a reversal pattern because it negates the prior day's price movement, which signals a reversal in sentiment and as a result price.
The candle signals that the preexisting trend ran out of steam and that a reversal in price is near. The harami candlestick is one of the most basic technical patterns. For more information about basic technical analysis and how to use harami candles to identify trend, check out the instructional video, “Introduction to Recognizing Reversals in Trend”.CLICK HERE.
The Nikkei has continued to follow through and move higher, but the big test will come at 9600, which if the Nikkei started a bearish trend, it would find immediate and staunch resistance. But if a bullish trend is beginning, the index would rise to 10000 before any major selling pressure ensues.
Psychologically, the market wants to go higher. Even during the first hours of Japan's crisis, people were calling in asking,”when should we buy Japanese stock.” In fact, Japan was the only global index to post a net positive inflow last week.
Other than a few etfs, there are not many options to U.S. investors who want to invest in Japanese related stock. But Morgan Stanley came out with a great one page summery of alternative assets, in case you want to allocate your money into Japan.
Both Honda HMC and Toyota TM look appealing. But similar to the U.S. indices, I would prefer they consolidate more (and at lower levels) before resumption of the bullish trend (long-term) begins. HMC should find resistance at $40.75 while TM should see selling pick up at $87. In both stocks, last week's lows should provide ample support over the next few months.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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