In our last update on the Nikkei [see: Update on NKD, Aug 12] we slapped a target at 19,240 — a very obvious H&S Pattern neckline. At the time, it seemed imminent, as the chart from that post shows: NKD held on for another week before reaching our target. But, by then, more selling pressure had built up. When it was finally released on Aug 24, it resulted in as spectacular a decline as NKD has seen in years.
The result was a drop straight to our target… give or take 2,000 points. It’s true. NKD blew through the neckline and dropped all the way to 17,240. Total losses over those two weeks: 18%. The bounce back was also pretty dramatic. But, so far, it has failed to break out. There’s a reason; and, there’s a reason why investors should be concerned.
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