Notes on Nikkei And SPX

Nikkei
Back on 5/23 I posted about the freakish upward move in the Nikkei since last autumn,
a surge that included noticeable price gaps as it climbed. I cautioned that the old
technical adage that all price gaps are eventually closed might well apply in this case.
The recent dramatic price correction has worked to close out the last upside gap seen
in early April. It is likely that more than a few veteran traders are set to close out
their short positions now, especially since the NIK has put in short term support at
12450. $NIKK Daily Chart

The market failed to take out long term trend resistance on the recent surge to 16000,
but it is difficult to tell how significant a development that really is since the market
was so grotesquely overbought that almost any excuse would have sufficed to book the
gains. On the dark side, note too that support levels clear down to 10000 are hardly well
established. Moreover, the NIK still sits at a big premium to its 200 day m/a. Even so,
the market is getting oversold in the short run so we could well  be headed for a period
when some of the rowdiness settles out.

SPX
Yesterday I posted a nearly wimpy analysis of how the SPX was fast approaching a
confirmation that a more full bodied correction might be underway. Having watched this
overbought market whipsaw in recent months, I thought it wise to warn more damage
needed to occur to make a more solid case, and today's pop to the upside is just an
instance of how this run has been so tricky. Check below for more and the SPX chart
link.