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WEEKLY JAPANESE NIKKEI STOCK MARKET OUTLOOK FOR WEEK BEGINNING MARCH 16, 2009

Review: Last week’s close was 7569, up 396 points from the prior week. The low of the week occurred on Tuesday at 7021 and the high of the week occurred on Friday at 7571. The close was above weekly support, which is bullish. The close was also above the weekly trend indicator point for the 1st time in 9 weeks, which means it is upgraded to neutral.

Cycles: The 7021 low of last Tuesday (March 10) occurred in the 19th week of an older 13-19 week primary cycle, following the 6995 low of October 28. More than likely, that low was a double bottom and the end of that primary cycle. As last week’s letter stated, “The low of last Tuesday (March 3) was 7088, which is in the range for a double bottom to the start of the primary cycle. If this low holds as the primary cycle trough, it could be very bullish over the next 2-5 weeks, perhaps even longer since the low forming now could also be a 48-week cycle trough.” This is even better, because the second leg of the double bottom is even closer to the low that started the primary cycle, and yet it is still above it. It is my belief that we now start the first week of a new primary cycle, and perhaps even a new 48-week cycle. If so, this market should go even higher over at least the next 2-5 weeks, and possibly even longer. If it is a 48-week cycle, then the rally should last at least 6 weeks.

Still, there is no sign yet that the low of last week will represent a cycle of anything longer than the 48-week cycle. As sated before, “… the 3-year cycle is pointed down into June 2009 +/- 6 months. The 18.5-month cycle is also pointed down and not due until June 2009-January 2010. Our long-term strategy thus remains bearish into the second half of (this) year, which means we will sell all primary cycle crests into then… We should also note that a 48-week cycle is now due too, January 2-April 10, 2009. It is possible that if this current primary cycle trough is a double bottom, it could be the 48-week cycle trough. Then the longer-term cycle may not come in until the end of the next 48-week cycle.”

For now, aggressive traders may be long, with a stop-loss below the double bottom of 6995-7021. We anticipate higher prices over the next 2-8 weeks.

Geocosmics: Last week’s report stated, “We are now in the middle of the time band of the huge three-star reversal date of March 9. So far the low has been 7088, recorded last Tuesday, which is 4 days before this date. It is possible that was the primary cycle trough, even though it was a day early for the three-day allowance from March 9.” Bingo! Prices went a little lower on March 10, which is only one day removed from our March 9 three-star critical reversal date. That looks like the primary cycle trough.

There are no further geocosmic critical reversal dates in force until April 3-4, +/- 3 trading days. There may be a minor one in effect as winter ends and spring begins March 20-23, but I think the trend could be up into April now, and ideally in to the time when Venus turns direct, April 18, +/- 10 trading days.

Price Objectives and Patterns: Last week’s low of 7021 was probably a primary cycle trough, and possibly a 48-week one as well. A “corrective” 2-5 week rally for a primary cycle trough in a bear market would be 8271.34 +/- 295.02. If it was also a 48-week cycle trough, then the rally could last 6-16 weeks, with a price objective of 10,798.10 +/- 897.55.

The 25-day moving average is now at 7488. Prices closed above here. As stated last week, “A close above this average suggests that the primary cycle trough is completed, and a rally to the next primary cycle crest is underway.” The 24-week moving average is now at 8203 and still falling. A close back above here is needed to support the view that this is a new 48-week cycle. It is very possible

The 15-day slow stochastics start this new week with K = 60.71% and well above D at 38.31%. Last week’s report stated, “At the low of last week, stochastics were not making a new low, which is still a case of bullish oscillator divergence. That is a pattern that oftentimes occurs at primary cycle troughs, so last week’s low may have been it.” That bullish oscillator divergence signal was repeated at last week’s low, and foretold this rally. The 8-week slow stochastics are looking very bullish now. They start this week with K now at 20.32% and moving well above D at 13.06%. As stated last week, “If K can cross back above D this week that will be a positive sign. If K can rise above 25%, it suggests that this is a new primary cycle.” It will be there if this week’s close is up. I expect it to happen.

Technical Support and Resistance: Weekly support is now 7389-7434, 7203-7295, 6954, and 6510. A weekly close below 7203 is bearish. A trade below and a weekly close back above is a bullish trigger. Weekly resistance is 7660-7705, 7753-7844, 7944, and 8054. A close above 7844 is bullish, and a trade above resistance and close back below is a bearish trigger. The weekly trend indicator point is now at 7364. A weekly close below here will downgrade this indicator back to trend run down.

Bearish crossover zones remain in effect at 8597-8632, 9638-10,563, 11,500-11,700, 12,600-12,861, 14,223-14,252, 14,998-15,148, 16,029-16,373 and 17,695-18,005.

Strategy for this week: As stated last week, “Aggressive traders may now be long with a stop-loss on a close below last week’s low (7088), or below weekly support. It did not close below there on the weekly chart (although it did on the daily). Others may still be looking to buy if a new low occurs March 4-23.” Stay with this long position now for the next couple of weeks, unless we start to trade under 7021, or have a weekly close below weekly support.

Disclaimer: No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.