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Nikkei Top and Relationship With The DOW

DOW and Nikkei - Elliott Wave Forecast

There has been extensive discussion on the relationship between the Nikkei and the DOW, especially after the recent decline for the Nikkei. The three charts below illustrate the relationship and suggest that we could see a DOW top while the Nikkei completes wave (2) up. The overlay chart below illustrates that the Nikkei and the DOW have topped out together and within months of each other since the bear market began for the Nikkei in 1990. We have also seen the a global relationship with stock markets worldwide since 2000. The upside for the Nikkei appears complete, but we should see a wave (2) rally which could coincide with a new high on the DOW.

DOW and Nikkei 2007 tops

DOW and Nikkei 1985-2014 Chart

We can see on the 2007 charts below that the DOW made a brief new high while the Nikkei was in wave (2) up.

We can also see a bearish H&S pattern on the DOW.

DOW and Nikkei tops in 2007

DOW 2007 Chart
Nikkei 2007 Chart

The Nikkei topped out in 2007 before the DOW. When the DOW was in its final wave up, the Nikkei fell short of the highs in wave (2) up. We could see a similar setup in 2014 for the DOW and the Nikkei. The chart below illustrates this possible relationship and timeframe.

DOW and Nikkei in 2014

DOW 2013-2014 Chart
Nikkei 2013-2014 Chart

The Nikkei had a clear triangle pattern for wave (4) from May 2013 to October 2013 with wave (5) completing at the end of 2013. We can also see a clear abc bear market rally completing from the 2009 low to the Dec 2013 top. (abc pattern not illustrated) It appears that we should see further upside for the DOW, but it also appears that the Nikkei has completed the rally from the 2009 low. We may not see further attention on the Nikkei until after it completes wave (2) up.

Our Jan 23rd 2014 newsletter illustated a short term inverse relationship with Gold and the S&P500. We have seen the expected bullish breakout for Gold but after the recent decline for the S&P500 we should still see further topping action.

We still need to see further action on the Nikkei to confirm that this relationship is in play, but this newsletter was issued to give you a heads up on the expected action.

These charts are only a guide so that you can follow the action and monitor the expected outcome. The action could play out exactly as illustrated or it may need minor adjustments as we follow it through.

Happy Trading!!!

 


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The commentary and forecasts are updated daily, including intraday commentary and chart updates. Fibonacci pivot dates and cycle analysis are also utilized to forecast reversal dates. The indices covered include the NASDAQ, DOW, S&P 500, SOX, Nikkei, DOW Transports, TSX, BSE, KSE, AORD, HSI, DAX and FTSE. Commodity charts include Copper, XOI, Crude Oil, Nat Gas, Gold, GLD ETF, Silver, SLV ETF, HUI and/or the XAU (Gold and Silver index). Additional Elliott Wave charts cover the US Dollar (USD), EURO FXE ETF, Canadian Dollar (CAD) FXC ETF, 10 Year Treasury Note Yield (TNX), Bank Index (BKX)

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