Nikkei lower after resistance try fails; JFE down

* Nikkei flat after early gains, yen worry remains -analysts

* Fails to break resistance at 9,520, level of 25-day MA

* Slow stochastic nears overbought territory but RSI neutral

* JFE Holdings slides after forecast below expectations

By Elaine Lies and Aiko Hayashi

TOKYO, July 27 (BestGrowthStock) – Japan’s Nikkei average edged down
0.1 percent on Tuesday after failing to break above a key
resistance level, with support from robust earnings at home
countered by persistent worries about a strong yen.

A surprising 23.6 percent jump in U.S. new home sales in June
from May countered some disappointing data in recent weeks that
had increased concerns the economy could slip back into
recession, boosting U.S. stocks (Read more about the stock market today. ) more than 1 percent.
[ID:nN26203473]

The benchmark Nikkei (.N225: ) spent much of the day in
positive territory but slipped shortly before the close, with
market players acknowledging that while there were signs of
improvement it was still too early to say the tide had turned.

“The housing data isn’t necessarily as good as it seemed. In
some ways it was just a correction of the sharp falls the month
before,” said Hiroaki Osakabe, a fund manager at Chibagin Asset
Management.

“There’s a bit of reassurance, yes, but we still can’t yet
definitely say that things are really improving.”

The benchmark Nikkei (.N225: ) shed 6.81 points to 9,496.85
after failing to break decisively above resistance at 9,520, the
level of its 25-day moving average. The broader Topix (.TOPX: ) was
flat at 846.12.

Trading volume was moderate, with market players saying many
investors wanted to wait and see earnings before trading, except
in the case of companies whose results were likely to send their
share prices sharply higher.

Japanese earnings reports pick up steam this week, and after
the bell exporter heavyweight Canon Inc (7751.T: ) posted a 153
percent rise in quarterly profit, bigger than expected, on robust
sales of its high-end cameras.

Market players had been hoping the Nikkei would break above
its 25-day moving average, a move that would have cleared the way
for further gains. Its next target likely stands at 9,800, near a
recent peak hit on July 14.

But charts show a lack of clear direction for the benchmark.

Its slow stochastic — a measure of how oversold the market
is and whether it is in a short-term up or down trend —
continues to head higher but is approaching overbought territory,
though its relative strength index (RSI) is neutral at 48.

But its MACD, an indicator of market momentum, headed higher
after a bullish cross.

“Even though investors are welcoming solid earnings at this
moment, the economic outlook for the latter part of this year and
after remains uncertain,” said Kazuhiro Takahashi, general
manager at Daiwa Securities Capital Markets.

Masayoshi Okamoto, head of dealing at Jujiya Securities, said
foreign investors appeared to have stopped selling Japanese
shares but that buying had yet to really revive.

“Only some European investors seem to be buying after dumping
Japanese shares from their portfolios earlier this summer,” he
said.

EARNINGS IMPACT

Activity was by and large earnings driven.

Kao Corp (4452.T: ) rose 1.1 percent to 2,111 yen after the
home products maker posted earnings for the April-June quarter
showing operating profit up 34.6 percent from the same quarter
last year, citing sales growth in Asia for its consumer products
and chemicals divisions.

Seiko Epson (6724.T: ) jumped 4.4 percent to 1,156 yen after
the Nikkei business daily said it will likely post an operating
profit of 2 billion yen ($23 million) for the April-June quarter
compared to a loss of 12.4 billion for the same quarter last
year, going into the black for the first time in two years.

But shares of exporters that had led market gains the
previous day lost steam. Canon fell 0.4 percent to 3,515 yen and
Kyocera Corp (6971.T: ) declined 0.7 percent to 7,410 yen. Toyota
Motor Corp (7203.T: ) shed 1.6 percent to 3,040 yen.

Shares of JFE Holdings Inc (5411.T: ), the world’s
fifth-biggest steelmaker, slid 3.1 percent to 2,656 yen after it
posted a quarterly profit but its forecast missed market
expectations.

The stock eked out gains earlier after it said it plans to
buy a stake of 14.99 percent in India’s JSW Steel Ltd (JSTL.BO: )
for about 90 billion yen ($1.04 billion). [ID:nTKX006906]
[ID:nTOE66Q02R]

Trade was moderate, with 1.7 billion shares changing hands on
the Tokyo exchange’s first section. Advancing shares outnumbered
declining ones 862 to 643.
Stock Market Research

(Editing by Michael Watson)

Nikkei lower after resistance try fails; JFE down