Nikkei to test its strong horizontal support of 9000 soon

As at 9.00pm EDT, Nikkei index dropped 578 points (or 6.03%) to 9040. This followed yesterday's sharp drop of 634 points (or 6.18%). We can see from the chart below that Nikkei index has just violated its 2-year uptrend line at 9300. It will soon test the strong horizontal support at the 9000 mark. I think this support level should hold & a decent rebound could set in.

Those who like to get into this play can look at some ETFs that track the Japanese stock market, such as:

DBXT MSJAP 10US$ (SGX Code: LF2)

The investment objective of the Fund is to track the performance of the Underlying Asset, which is The MSCI Total Return Net Japan Index

Lyxor Japan 10US$ (SGX Code: CW4)

The Fund’s investment objective is to provide investment results that closely correspond to the performance of the TOPIX® Index insofar as possible minimizing the tracking error between the Fund’s performance and that of the Index. The Fund aims to achieve a tracking error, calculated over a period of 52 weeks, of less than 1%. Should the tracking error be higher than 1%, however, the Fund still aims to achieve a rate of tracking error that is less than 5% of the volatility of Index .

Lyxor ETF Japan (TOPIX®) [HKEX Code: 2814]

Lyxor ETF Japan (TOPIX®) aims to achieve investment results that closely correspond to the TOPIX® Index insofar as possible minimizing the tracking error between the ETF's performance and that of the Index.

Chart: NIKK's daily chart as at March 14, 2011 (Source: Stockcharts)

Note: Nikkei broke below the 9000 level convincingly as at 11.30pm EDT. With this breakdown, it is advisable to avoid this trade. Those who have entered this trade earlier should cut their position.