Global equity index vulnerabilities

Intermediate
  • Global financial markets continue to react negatively to global trade war concerns.
  • Asian, European and US equity averages have all rolled back lower this week into late May, damaging rebound effort made from mid-May.
  • This sets the immediate risks lower and starts to resume the negative tone set during the significant selloff in the first half of May.
  • The threat into month-end is now for more bearish intermediate-term signals back through the current May lows.
  • Today we focus on the Japanese benchmark average, the Nikkei 225.

Nikkei bear threats increasing

A setback from midweek and again Friday, damaging the rebound theme from last week and threatening a more negative development into late May, leaving risks lower for next week.

On an intermediate-term basis, the selloff in the first half of May neutralised the intermediate-term bull trend for 2019 with the surrender of the 38.2% Fibonacci retracement level at 21058.

This leaves an intermediate-term range as 22362 to 20751, BUT with risks skewed for an intermediate-term bearish shift below 20751.

For Today:    

  • We see a downside bias for 20922; break here aims for 20850, maybe key 20751.
  • But above 21175 opens risk up to 21267, maybe towards 21430.

Intermediate-term Range Breakout Parameters: Range seen as 22362 to 20751.

  • Upside Risks: Above 22362 sets a bull trend to aim for 22699 and 24448.
  • Downside Risks: Below 20751sees a bear trend to target 20315, 20000 and 18948.

Daily Nikkei 225 Chart

Nikkei 225

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