Nikkei renews 18-mth closing high; Fast Retailing dives

* Nikkei rises above 38.2 pct retracement of 2007-08 sell-off

* Resistance seen at 11,600 based on past trade -analyst

* Fast Retailing slides after March sales drop

By Elaine Lies

TOKYO, April 5 (BestGrowthStock) – Japan’s Nikkei average closed at
an 18-month high for the third straight session on Monday, buoyed
by strong U.S. jobs data that suggested economic recovery is
taking deeper hold, though earlier gains were pared as investors
locked in profits.

U.S. employers created jobs at the fastest pace in three
years, news that pushed the yen to a seven-month low against the
dollar and helped the Nikkei forge above a 38.2 percent
retracement of its slide from a 2007 peak to its 2008 trough.

But Fast Retailing (9983.T: ) slid 10.6 percent, its biggest
one-day loss since January 2007, after the company said its
Uniqlo casual-clothing chain’s same-store sales slid 16 percent
in March as cold weather hurt sales of spring clothing.

“Gains are being limited by a bit of profit-taking, based on
the sense that the Nikkei may be a little overstretched and the
fact that this long-awaited jobs news is finally behind us,” said
Hiroaki Osakabe, fund manager at Chibagin Asset Management.

Technical indicators such as MACD as well as daily and weekly
Ichimoku charts show the Nikkei is in an uptrend.

But the Nikkei’s relative strength index (RSI) has risen to
76, well above levels at which the market is considered
overbought, and on daily charts it has broken through its upper
Bollinger Band, a move that can signal a correction, albeit often
slight.

The benchmark Nikkei (.N225: ) hit the day’s high of 11,408.17
within minutes after the opening and pared gains steadily
afterwards. It closed up 0.5 percent or 53.21 points at
11,339.30.

The broader Topix (.TOPX: ) gained 0.6 percent to 995.68 after
earlier rising as far as 996.97, its highest in 18 months.

But Nagayuki Yamagishi, investment strategist at Mitsubishi
UFJ Securities, played down worries that the Nikkei’s rally was
looking overstretched.

“As long as it rises along with gains in the five-day moving
average, an extreme sense of overheating is unlikely to emerge,”
said Yamagishi. The Nikkei has mostly moved above its five-day
moving average since early March.

Yamagishi said the Nikkei may face resistance at 11,600,
adding that trade just above that level has been relatively
sparse in recent years.

If that level is breached, however, the Nikkei could set its
sights on 12,000, Yamagishi said.

In terms of retracement levels, the next major level is the
50 percent retracement of the 2007 to 2008 sell-off near 12,650.

SHARP UP, FAST RETAILING TUMBLES

Investors were also reluctant to bid the Nikkei much higher
amid market concern that the rise in private-sector hiring could
prompt the Federal Reserve to raise the discount rate again on
Monday when it holds a meeting, an issue that also gave the
dollar some support. [ID:nN01126422]

On Feb. 18, the Fed surprised the market when it hiked the
discount rate by a quarter point to 0.75 percent.

But other market players said they felt the chance of a major
interest rate hike, while perhaps a bit more possible than
before, still was unlikely to occur before late this year.

Sharp Corp (6753.T: ) rose 3.3 percent to 1,249 yen. It plans
to start making advanced 3D displays this year that require no
special glasses for cellphones and other mobile devices, betting
demand for 3D images will grow beyond movie theatres and living
rooms to portable machines. [ID:nTOE630063]

The Nikkei business daily also reported on Monday that Sharp
plans to diversify into the electronic signboard business by
offering 52- and 60-inch LCD panels that can be assembled into
large displays at low cost.

Fast Retailing tumbled 10.6 percent to 14,920 yen and was the
biggest decliner on the Nikkei 225.

The slide in March sales snapped a trend of generally robust
growth since 2008 on the back of hit products like its “Heattech”
line of basic garments made of heat-retaining fabric.

Softbank Corp (9984.T: ) shares fell 3.9 percent, the
second-biggest loser among Nikkei 225 stocks, to 2,247 yen on
news that Japan’s government planned to make it easier for mobile
phone users to switch operators while keeping the same phone.

The move is expected to encourage some subscribers to switch
to NTT DoCoMo (9437.T: ), which has the strongest coverage area,
and hurt iPhone provider Softbank, whose network is not as
strong. [ID:nTOE63401G]

NTT DoCoMo shares gained 0.8 percent to 144,200 yen.

Volume fell off, with 1.8 billion shares changing hands on
the Tokyo exchange’s first section, below the 2 billion threshold
that market players consider a sign of active trade.

Advancing shares outpaced declining ones by over 2 to 1.

Investing Advice

(Additional reporting by Masayuki Kitano; Editing by Chris
Gallagher)

Nikkei renews 18-mth closing high; Fast Retailing dives