The Nikkei 225 has rebounded from its October lows, but sharp swings are also expected in the November market. Attention is focused on factors that could determine the market's direction, including the launch of the new TOPIX calculation and the level of margin-buying balances.
As the Nikkei 225 remained in a corrective trend, it fell to a low of ¥61,462 on 23 October and was at one point sold down ¥1,445, but closed ¥214 lower at ¥62,693. The daily chart formed a hammer, with a long lower shadow extending to the 200-day moving average. Meanwhile, many short-term technical indicators were suggesting oversold conditions.
The Nikkei 225 then rose for 3 consecutive sessions through the 29th. The sharp decline from the high of ¥70,798 on 6 October to the low of ¥61,462 on the 23rd reached ¥9,336 (13.1%), and the possibility of a move toward a one-third or half retracement has been noted.
The daily chart fell below the 25-day and 75-day moving averages and support lines, suggesting a bearish turn and a breakdown. The rebound is a technical correction, and the ¥66,000 level could become a key point going forward.
Although outstanding margin purchases declined for the second consecutive week, they remained high at ¥6.534 trillion, while the valuation profit-and-loss ratio deteriorated to minus 13.50%. The focus is on whether the Nikkei 225 will break through a key level following the launch of the new TOPIX calculation on 30 October.
While the launch of the new TOPIX calculation could lead to the Nikkei 225 breaking through a key level, there is also a view that sharp swings will continue depending on the performance of the U.S., Chinese and South Korean markets, with the U.S. midterm elections scheduled for 3 November.