9/28 (Wed) 08:34 Accurately predicting today's Nikkei stock average movement - Satoshi Inoue "Current of the Market"

In the article from 9/28 (Wed) 08:34, Professor Tetsuo Inoue has accurately predicted the movement of today’s Nikkei Average as follows.

Trend 127: Is the subprime loan problem not over yet?

Release date: 2016/09/28 08:34

Yesterday, although Deutsche Bank was described as having a “more than 7.5% decline,” the closing price in the European markets yesterday was 10.550 euros, unchanged from the previous day, with a high of 10.760 euros and a low of 10.180 euros, raising concerns that it might fall below 10 euros. If this level is breached, speculation that “credit concerns will rise” or that “funds will accelerate selling” is likely to arise, and the situation remains precarious.

What is worrying is that, similar to the time when concerns about European fiscal stability were rising, this is not only a single issue; the stock prices of other banks are also being directly affected.

Last night, among major European banks, only Deutsche Bank did not close lower, while Credit Suisse, which was thought to be unproblematic, fell sharply by 3.28%. It has fallen by 5.8% in three trading days. This action of “dragging down not only one bank’s stock but the overall banking sector” would be harsh for a market that imagines a chain reaction of anxiety. For overseas markets last night, one should focus not on a rebound for the US market after three trading days, but on three consecutive days of declines in Europe. Therefore, considering the dividend ex-date,it gives the impression that the Nikkei futures have returned to a level without change, but during today’s intraday trading, a bottoming-out pattern like yesterday is unlikely to be expected or desirable.

As noted in Sign, today the RSI 14-day value at the close is 31.98% if the close is 16,370 yen, i.e., below 32% (if the close is 16,500 yen, it would be 34.24%). In any case, since this is the low level since just after Brexit on 6/28, if the 32% breach persists for two of the three trading days, one would normally consider writing puts on a tentative basis (qualitative), but this time I will judge by the 25-day moving average deviation and the stock price trends of the European banks mentioned above.

The U.S. Department of Justice, regarding the improper sale of MBS (mortgage-backed securities), has demanded a settlement amount of $14 billion from Deutsche Bank. No matter how much its executives say they do not intend to raise capital, rumors suggest there may be undisclosed issues behind the scenes (perhaps something they do not want to be seen off the books), and even with Merkel saying there is no need or intention to inject funds, concerns about the postponement of the problem and its spread to other banks cannot be expected to improve dramatically. This remains a troubling material factor for a long time to come.

Thus, the white swan of Deutsche Bank is increasingly turning black. And the MBS in question this time is clearly related to U.S. subprime loans. The subprime loan problem remains in this form and is not over yet.

You can read Inoue Tetsuo’s “Tsuiro” here.