After the sharp decline in early November, the Nikkei Average reached a phase in which it was closing above its 5-day moving average, with the extent of its recovery toward the 200-day moving average becoming the focus for future market momentum.
After the previous column discussed the US midterm elections and the Nikkei Average's movements, the index's decline accelerated. Following a period in which it fell below the 200-day moving average, it recorded the third-largest decline in its history on 6 November. During trading hours, it temporarily reached 56,745, falling below 57,000.
The rebound continued on 9 and 10 November, recovering most of the decline on 6 November. The focus going forward is whether the rebound will continue and whether signs of the decline stopping and a bottom forming will emerge.
Movements around the 5-day moving average will be key to a continued rebound. If the index can remain above the level of the 5-day moving average's 65c decline at the 10 November close, its price could turn sideways or upward and potentially provide support.
Momentum showed bullish divergence at the low on 6 November, rising despite the stock price making a new low, and resumed an upward trend in the week of 9 November. Attention is focused on whether it will move above the zero line and become the dividing line for judging the strength of upward and downward momentum.