Nikkei seen supported by healthy charts

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to be supported on Tuesday, after finishing higher the previous day, reflecting a healthy technical climate and underlying bullish sentiment since early November.

Still, Tokyo stocks are expected to trade in a narrow band, with investors continuing to watch Chinese stocks for direction after Shanghai shares fell 1.9 percent the previous day following China’s credit-tightening at the weekend.

“Japanese shares should trade in a narrow range today, but they should be supported by solid bargain-hunting demand,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“Ample liquidity conditions should prompt money into Japanese stocks based on their solid performance in recent months.”

The Nikkei has climbed about 13 percent since early November, but is still down 2 percent in the year to date.

Investors may be keen to push the Nikkei higher above last year’s close of 10,546.44 by the final trading day on Thursday, analysts said.

Nikkei futures in Chicago closed at 10,355, little changed from the Osaka close of 10,350.

Technical support could strengthen further if the Nikkei breaks through resistance at 10,420.74, where December futures and options contracts settled earlier this month, analysts said.

Nishi said the Nikkei is expected to find solid support at the 25-moving average, currently at 10,193.

Some traders are focusing on Japanese industrial output data for November due out just before the open at 2350 GMT.

A Reuters poll showed output is expected to have risen 1.0 percent in November, the first gain in six months, in a sign companies are increasing production on expectations for a pickup in global demand early next year.

(Reporting by Chikafumi Hodo; Editing by Chris Gallagher)

Nikkei seen supported by healthy charts