June 14, 2013 / 2:51 AM / in 5 years

Nikkei bounces from Thursday's plunge, technical charts still bearish

* Nikkei rises 2.8 pct, Topix up 2 pct in active trade
    * Nikkei still holds below Ichimoku cloud in bearish sign
    * Volatility remains elevated

    By Dominic Lau
    TOKYO, June 14 (Reuters) - Japan's Nikkei average jumped
nearly 3 percent on Friday morning, recovering some of the
previous session's sharp fall, as robust data eased concerns
over whether the U.S. economy can withstand a pullback in
stimulus by the Federal Reserve.
    "People are unwinding (short) positions, or people are
trying to buy on dips. The market did rebound and the U.S. did
well so people are buying on the back of that," a senior dealer
at a foreign bank said.
    U.S. stocks rallied overnight after retail sales rose more
than expected in May and first-time applications for
unemployment benefits fell last week - signs of economic
    The senior dealer said buy orders outpaced sell orders by
three to one and there was a good balance between long-only
investors and hedge funds, although long-only players were a bit
more active.
    "For the time being, the Nikkei is trying to find itself
where it should be after the crazy opening," he said, referring
to Nikkei June futures and options contracts settlement, known
as "special quotation".
    By the midday break, the Nikkei was up 343.04 points
at 12,788.42 after trading as high as 12,889.46, though it was
still holding below the Ichimoku cloud in a bearish sign. 
    On Thursday, the Nikkei tumbled 6.4 percent to its lowest
close since April 3, the day before the Bank of Japan unveiled
sweeping stimulus to revive the economy, and below the Ichimoku
cloud for the first time since mid-November. It also took the
slide from a 5-1/2-year peak hit on May 23 to nearly 22 percent,
slumping into a bear market and wiping about $700 billion off
the Nikkei's market capitalisation.
    Over the past three weeks, trading in the Nikkei has been
volatile. The 30-day implied volatility for the benchmark jumped
to 42.3 percent on Thursday, its highest since the March 2011
earthquake and tsunami, according to Thomson Reuters Datastream.
    Investors, mainly hedge funds, have been cutting their long
Japanese equities and short yen positions on concerns that the
Fed will roll back its stimulus and after the Nikkei had rallied
more than 80 percent from mid-November to that multi-year high.
    The broader Topix index climbed 2 percent to
1,065.28 in active trade on Friday morning, with volume at 58
percent of its full daily average for the past 90 trading days.
    Beaten-down real estate companies were in demand,
up 3.5 percent, while exporters Toshiba Corp and
Hitachi Corp were up 3.8 and 2.7 percent respectively.
    Nomura Securities was bullish, lifting its Nikkei year-end
target to 18,000 from 16,000, despite the recent selloff.
    "We do not brush off the recent stock market turmoil
lightly. Indeed, we see it as significant because it constitutes
a challenge to Abenomics," it said in a note.
    "If share prices fall back to where they were before the BOJ
announced its new phase of monetary easing, this could prompt
market observers to pronounce Abenomics a failure." 
    The sell-off has taken Japanese equities' valuations,
measured by the 12-month forward price-to-earnings, to 14.1 from
a three-year high to 16.3 touched two weeks ago, Datastream
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