Got some questions on the Nikkei crash, so I will give my technical charts and my updated key levels, including those for Nikkei and for long term treasury bonds (TLT).
The Nikkei crash started a few weeks ago, and now seems to be spilling over in other markets.
The Japanese market is down over 20% from its recent peak, but based on my Earl indicators I wouldn’t be in a hurry to start buying.
Here is the weekly chart (click for larger image):
The Earl indicator has been showing a major bearish divergence for months, and once the Earl2 peaked out there was no way back for this market. A quick rebound to 14000 remains possible, but I wouldn’t rush in until the Earl2 is back into bottom territory, which is at least a few months away.
A look at the daily chart for possible support levels (click for larger image):
Also here we had a clear bearish divergence since early April. The Earl has turned up from oversold level for a quick rebound rally. But the Earl2 is not showing any sign of a bottom yet, so it is too early to buy.
Major support levels to watch: 11800 and then 10400.
I expect a short term bottom near 12000, then a rebound rally to just below 14000. Then a 2nd decline into autumn.
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Here are my current key reversal levels:
| Status | Key (W) | Mode | Key (D) | |
| Nasdaq | BULL | S: 3221 | DECLINE * | R: 3456 |
| S&P 500 | BULL | S: 1534 | DECLINE | R: 1644 |
| Nikkei | BULL | S: 11860 | DECLINE | R: 13992 |
| Bonds (TLT) | BEAR | R: 120.24 | DECLINE | R: 116.80 |
| Gold (spot) | BEAR | R: 1555 | DECLINE | R: 1414 |
| Euro/US$ | BULL * | S: 1.2921 | RALLY | S: 1.3024 |
| Crude Oil(CL) | BULL | S: 90.95 | RALLY | S: 93.32 |
(Legend: W = weekly, D = daily, R = resistance, S = support, * = change from previous week/day)
The Nasdaq dropped below its daily key reversal level yesterday, and is now in DECLINE mode again.
The Nikkei is still in BULL status, and will remain so if it closes the week above 11860.
Good luck, Danny
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