Yen depreciation and stock rise take a break

Post-event short-term and rapid-upward market

In the past four years, the short-term rapid-upward market after surprises

has been the third time in this instance, with three occasions of upward magnitude compared

to the previous ones. We will compare the three occurrences.

April–May 2013: when the unprecedented easing was introduced (04/04)

On the day High price

4/04 12,634 yen 5/22 15,627 yen

32 days +2,993 yen

October–December 2014: when追加 easing was introduced (10/31)

10/31 16,413 yen 12/08 17,935 yen

25 days +1,522 yen

November–December 2016: when President Trump was decided

11/09 16,251 yen 12/20 19,494 yen

29 days +3,243 yen

From the above, the post-event short-term and rapid-upward market

is estimated to have a shelf life of about one and a half months.

This time too, after reaching the high price, 29 days have passed, and the period may be a timing where a brief pause is natural

and not surprising.

Leading the stock rise, the yen depreciation also seems to be pausing

From the second week of November to the week (~12/16), five weeks in a row

the dollar strengthened and the yen weakened, and both the high and low prices surpassed the previous week's

levels, but in the week of (~12/22) the lower bound rose but the upper bound did not.

The high range did not push higher. There is no material that would promote further円安

trend within the year-end, so the yen depreciation trend is considered to be pausing.

Yen depreciation low Yen appreciation high

～11/11 106.95 yen 101.20 yen

…

～12/16 118.67 yen 114.74 yen

～12/22 118.24 yen 116.55 yen

The leading indicator of price movements in the high-price range is peaking

The one-month moving average of the price rise to fall ratio, the condition for stock prices to stay in the high-price range, is being kept at 120% for 28 days

continuously. At the initial stages of the Abenomics market, from early December 2012

to early February 2013, 41 consecutive days, is evidence that the stock prices are able to stay

Even so, the one-month moving average of the price rise-to-fall ratio peaked at 170% on 12/08, and recently has declined to 127%. The prerequisite for remaining in the high-price range is in the 120% range, making the level delicate. The high-price-range momentum indicators and the one-month moving average’s peak-out must be noted, as two weeks have passed.

The number of new highs, a symbol of chasing highs, also peaks; as the year begins and new highs continue to be updated, the number of new highs increases. During the period staying in the high-price range, the count of new highs eventually declines, indicating weakened force to push prices higher.

At the moment, the one-month average of new highs peaked on 12/16 and has begun to decline. The data shows that the number of new highs is roughly equal to the high price. Moreover, the number of new highs on 12/22 dropped to 66, a level not seen for one and a half months.

The yen, which has been leading stock prices higher, shows signs of stopping, while the one-month moving average of the price rise to fall ratio and the number of new highs are weakening from the highs, suggesting a pause in the yen depreciation and stock-price rise trend.

It seems like a pause is in order.