June 11 Nikkei Average: Inoue Tetsuo, who predicted the Dow's top, explains the "RSI Total" to boost investors' foundational knowledge
In yesterday's 09:18 published article [Trend 1058: RSI and the Tokyo Stock Exchange REIT Index 2],
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The RSI total to watch is the notable one; last Friday I wrote that we should pay the most attention to the Nikkei Average RSI total, but if we record the changes since the start of this week: the Dow's RSI total reached beyond the normal bounds, from 155.49% → 160.66% → 160.63%, and the Nikkei Average, which had already been outside the normal range, moved from 173.91% → 176.69% → 177.66%, getting very close to the “limit” value of 180%. I attach both charts for you to view.日経平均については「Sign」でお伝えしているように過熱感のフル点灯状態が続いており、その継続日数は、昨日時点で、史上初の10日となった。それまでの記録（2005年以降）は6日、また、1期間（一度途絶えてもまたフル点灯）における示現日数のこれまでに最高が8日であったことから、それさえも「継続日数」というさらに強い形で抜いてしまったことになる。ここ2日間の、なかなか上値を取りに行かれない重さは、当然の状態であるといえる。
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As described by Mr. Tetsuo Inoue, who noted that both the Dow and the Nikkei Average were in the ceiling zone, they hit a ceiling and dropped sharply.
Regarding the magnitude of the RSI total, Inoue Tetsuo’s “Trend of the Market” (2020-04-09 08:48) mentions that it nailed the bottoms of the Dow and the Nikkei Average in March.
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Inoue Tetsuo ‘Trend of the Market’ 2020-04-09 08:48
Today, for the first time in a while, I will publish the RSI total graph, but in short, for the Dow, as I have previously stated, “Even if the RSI hits a bottom, the actual index bottom tends to appear about 5 to 10 days later”; while for the Nikkei Average, it fits exactly.
Why this happened is that the smallness of the RSI total values is everything. As the graphs clearly show, in this decline the Dow’s RSI total did not fall to levels seen in the sharp declines of recent years, but the Nikkei Average did reflect this “unusualness,” dropping to the abnormal value level of 21.30. Therefore, in this regard, the latter is more accurately indicated.
In today’s analysis, I explain the reason for the decline and add explanations about the RSI total, and I also discuss the market outlook going forward, so I am posting the full “Trend.”
Please look forward to further analysis of Inoue Tetsuo’s “Trend of the Market,” which will enhance investors’ foundational knowledge.
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Trend 1059: Up without justification, down without reason
Publication date: 2020/06/12 09:24
Naturally, the ongoing series comparing the degree of decline of the Tokyo Stock Exchange REIT Index and the Nikkei Average will be paused today.
It finally dropped.
Regarding yesterday’s Dow decline, the fourth-largest in history (this too is meaningless, as it happened repeatedly during the Covid shock), some point to the previous day’s FOMC as the reason, but there is no real reason to find; if there is no reason, there is no truth to seek. Looking for a reason where none exists is simply falsehood.
Prices rose in a state of no basis—valuation figures such as P/E ratios had no basis—then fell “without a reason” due to overheating. That is the story of the past three weeks in the market.
Until yesterday I pointed out the RSI total graph; today I will send the raw data to the left of the Dow and Nikkei Averages.
This time, because the March bottom day was nailed exactly by the Nikkei Average RSI total, I predicted that because it hit the bottom indicator, it would also suggest a temporary ceiling this time; but as the raw data shows, the day before yesterday, which approached the above-mentioned 180 limit value, was the RSI total bottom, and the Nikkei Average’s ceiling occurred.
As for the RSI total, I’ve always given it the MVP title, and this time too I am impressed.
Now, going forward, since the decline occurred without a cause, there is no fundamental reason; I expect a rebound somewhere, and for technicals to regain dominance in the market. Also, I anticipate that even if the U.S. market falls, the Japanese market will show strength the next day.
To prepare for this, next to watch is the Nikkei Average’s 3-disparity levels: the “Plus 5%,” the “Minus 10%,” and the “Minus 15%”—the “Minus 10%” level.
This morning’s published (today’s) Minus 10% level is 20,584 yen. Even if we continue to track, it is expected to rebound without approaching this Minus 10% level again. Therefore, from next week onward, we may consider adding new levels.
written by Hayakawa
