Hong Kong "massive demonstrations" still the Dow's three divergences in total that Japanese stocks hold as the basis — Mr. Tetsuo Inoue

When will the decline in Japanese stocks occur? No, in today’s article I expand on the evidence that they have not fallen yet.Mr. Tetsuo Inoue

　It is explained using graphs of the Dow and Nikkei three-divergence totals (5-day, 25-day, 75-day).

Mr. Tetsuo Inoue article; Published date: 2019/11/12 08:30

Trend 908 RSI Total_3-Divergence Upper Bound 2

As noted in "Sign", the RSI total (RSI 14-day 5-day average + 10-day average) is 170.83%. After the 173.10% reported last Friday, it fell to 173.04% yesterday.

Today, as yesterday, I attach the NEW graph of the “next focus” three-divergence total (5-day, 25-day, 75-day) (Graph 1); this value rose to 13.23% yesterday from 12.71% the day before, an increase of 0.52%. The day-over-day changes of +0.60%, +0.74%, +0.40%, +0.56% are not small, and although it has not yet topped out, as repeated, it is again approaching the upper limit of the statutory range (+10%–+15%).

Yesterday, Asia markets declined, led by China and Hong Kong; when news broke that a youth was in serious condition due to police gunfire in Hong Kong, the Japanese market also wavered, but in the end the Nikkei average’s drop was only 0.26%.
Regarding China’s decline, it was also prompted by President Trump’s denial remarks yesterday after last Friday’s report (in “Trend” we conveyed China’s material calmly, including the US market’s after-hours moves and WSJ’s view). The Shanghai Composite fell 1.82% yesterday—the largest since 2.58% on July 8, more than three months ago—and Hong Kong’s drop occurred amid large-scale protests (in response to last week’s student death).

Hong Kong’s (Hang Seng Index) decline was a substantial 2.62%, the largest since August 5’s 2.85%.
What happened on August 5? It was the day of the “8/5 mass strike,” which led to closures including the airport. The call for a “mass strike” has since become a “mass demonstration.” In any case, Hong Kong’s turmoil has not subsided.

In such circumstances, as described above, Japanese stocks showed a calm movement, and the JASDAQ, on a closing basis, captured a year-to-date high (the low occurred on the first trading day after the Apple shock).
And likewise, or rather, the US market maintained a calm stance and did not move on Asia-related headlines or geopolitical materials from other countries.

Yesterday was Veterans Day. The bond market was closed, but the stock and commodity markets, which are normally open, see particularly thin trading in the forex market. The reason is that forex dealers—the banks themselves—are on bank holidays, and neither dealers nor investors participate.

In terms of stock market volume, NYSE total volume was 760 million shares, dipping below 800 million for the first time in 10 trading days, indicating light trading. But compared with October’s average volume of 826 million shares, that’s about an 8% drop, not a level to overly worry about. In fact, last Veterans Day had trading above 850 million shares. Please understand that a bank holiday does not mean the stock market is effectively closed.

Graph 2 shows the Dow’s three-divergence total (5-day, 25-day, 75-day) (5-day moving average). It provides the basis that Japanese stocks are still “holding,” given the current lag in US stocks. Also, pay attention to the graph’s axis scale difference (Japan vs. US).

Nikkei 3-Divergence Total (5-day, 25-day, 75-day) (5-day moving average)

Dow’s 3-Divergence Total (5-day, 25-day, 75-day) (5-day moving average)

Written by Hayakawa