Update on NKD: Oct 31, 2014

When we last updated the Nikkei 225 [see Oct 14 post], we noted the rising purple channel had broken down and the downside was in the 14,000-14,200 range (from 15,030 at the time.)

Keep an eye on the falling red channel.  The next major support is way down at the white channel midline where it intersects with the purple .886 and gray .618 in the 14,000-14,200 range.  If they don’t prop up their “market” north of 13,860, the downside risk is enormous.

2014-10-14-NKD daily 0900

Since then, two major events have occurred.  First, Bullard blinked — arresting NKD’s decline at 14,400 instead of our 14,000-14,200 target.

Secondly, the BOJ just went full retard on QQE, upping the amount of bond buying (all of them — full monetization) and stock buying it will do (Japan’s public pension plan will more than double its holdings of stocks, and the BOJ will also increase its direct stock purchases.)

Today’s 8% rally has been amazing, but it has landed NKD in the middle of serious resistance: the white .886 at 17,068 and a trend line connecting the May 22, 2013 and Dec 31, 2013 highs.

2014-10-31 NKD daily 0900Given that USDJPY has also bumped up against Fibonacci resistance, I’m inclined to call at least an interim top here, and would fade today’s rally.

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