Nikkei set to trade in range, caution on 'overbought' sign

Mon Dec 10, 2012 6:37pm EST

TOKYO, Dec 11 (Reuters) - Japan's Nikkei share average is
set to trade in a tight range on Tuesday amid investor caution
over signs that the market is overbought, while volume may be
subdued ahead of major economic events overseas.
    A 10 percent rally in the Nikkei over the past month is
showing signs that the market is overbought, and profit-taking
on exporters could continue this week, market observers said.
    The Nikkei ended 0.1 percent higher at 9,533.75 on
Monday. Its 14-day relative strength index stands at 69.33. A
level of 70 or above is deemed overbought, and can often signal
a pullback in the near term.
    Market players said the Nikkei was likely to trade between
9,450 to 9,600 on Tuesday. Nikkei futures in Chicago 
closed at 9,535, down 5 points from the close in Osaka 
of 9,540.
    Exporters have led gains in the market over the past month
on the back of the weaker yen, after Shinzo Abe, the leader of
the main opposition which is expected to win a Dec. 16 general
election, called for the Bank of Japan to embark on "unlimited
easing" and set an inflation target of 2 percent.
    The market was unlikely to rally sharply over the next few
days, said Hiroichi Nishi, general manager at SMBC Nikko
Securities. "Large exporters may not move much, or even see
profit-taking. Instead, investors may see buying opportunities
in individual stocks like Renesas based on its new
developments."
    Struggling Japanese chipmaker Renesas Electronics Corp
 said on Monday it will receive 150 billion yen ($1.8
billion) in aid from a government-backed fund and manufacturers,
including key client automakers, to help it stay afloat.
    Analysts added that investors are keeping an eye on the
negotiations over the U.S. "fiscal cliff", a series of automatic
tax hikes and spending cuts that could hurt economic growth next
year.
    "It would be difficult to take large positions before more
details are out," Nishi said, adding that such events as a
two-day meeting of the U.S. Federal Open Market Committee on
interest rate policy starting Tuesday may also keep investors on
the sidelines.
    The broader Topix index slipped 0.2 percent to 
788.48 on Monday.
 
> Wall St gets small lift from technology and McDonald's   
> Euro gains vs dollar, Monti seeks to allay concern     
> Prices edge higher on Washington budget worries         
> Gold rises on US budget talks, Fed stimulus hopes      
> Brent oil gains after Chinese oil imports grow          
    STOCKS TO WATCH
    
    --Mitsubishi Chemical Holdings Corp 
    Mitsubishi Chemical has decided to freeze plans to spend an
additional 30 billion yen or so by 2015 to increase production
of lithium ion battery materials, the Nikkei said.
 
    
    --Renesas Electronics Corp 
    Japanese chipmaker Renesas Electronics, hit by slumping
orders and competition from rivals like Samsung Electronics Co
Ltd, secured a 150 billion yen ($1.8 billion)
lifeline from a government-led bailout on Monday.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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