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| Best
Online Trades Complimentary Newsletter - June 2, 2003 |
Major
Japanese Nikkei Buy Signal
Initiated
at 8556.25 June 2, 2003
Target Profit Potential: 20% to 70%
A weekly close
below 8000 would invalidate this signal.
On
an oscillator basis I currently see a major buy signal on the Japanese Nikkei
Index. I am not prepared at this time to say whether or not this is the end of
the 13 year long bear market. We will not know that until 1 to 5 years from now.
That possibility certainly exists however judging from the super long term charts
on the Nikkei which I have been examining. In fact I could even go so far as to
say it is very probable. But an indepth analysis of volumes on the Nikkei now
and over the last 6 months and the next 6 months to 1 year is necessary for confirmation
of the Nikkei's true strength. |
Chart
1 WEEKLY Nikkei Chart plotted against MACD Histogram
The
basis for my major buy signal on the Nikkei are the very large and long term divergences
as seen on the WEEKLY, and MONTHLY price bar charts. Weekly and Monthly price
bar charts have long term implications for any security. The WEEKLY price chart
of the Nikkei above shows a 2 year divergence in price versus the popular MACD
histogram.
A divergence depicts a situation where prices continue to reach
new lows, with less and less degree of price destruction, and less volume. In
other words, prices are drifting lower on their own waning momentum only and not
as the result of persistant selling conviction. |
Chart
2 Nikkei Index MONTHLY Macd Histogram chart
| Above
is the MONTHLY price chart compared to the Macd Histogram. Again here we see the
divergence between price and the oscillator. This is the first MONTHLY basis price
versus oscillator divergence I have seen on the Nikkei since the bear market started
in 1990. |
Chart
3 Nikkei Index QUARTERLY Prices against stochastic Osc.
The
even longer QUARTERLY time frame is in the chart above. Here I plot stochastic
against this time frame confirming once again that substantial price gains should
commence on the Nikkei in 2003.
Major challenges to overcome are the 14,500
and 21,000 major resistance areas. |
Chart
4 Monthly Nikkei Index chart with falling wedge shown
| Above
is the MONTHLY price bar chart of the Nikkei going back to 1984. One can see here
further evidence which suggests the Nikkei is due for a significant rally. Why?
Note the very large falling wedge formation indicating diminishing seller strength
and soon to be emerging new buyers. |
Chart
5 Nikkei Index IShares (Symbol EWJ)
Above
are the Nikkei ISHARES (Symbol EWJ) clearly showing the same bullish divergences
as explained on the Nikkei Index in the Charts 1-3. |
| June
2, 2003
-Best
Tom
BestOnlineTrades.com
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