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We put out a Conviction Buy call on the Nikkei on Jun 21st at 8600. In sympathy with other global markets, and also as a response to the muted economic statistics that have been coming out of China in recent weeks, the Nikkei has also fallen, in fact by around 45 more than the global benchmark the S&P500 as the 2 months relative chart below shows.

Nikkei relative to S&P 500

We think that the Nikkei is probing out a generational bottom and that on a 10 – 15 year view the index could easily double if not treble (in fact the vast majority of my personal pension has been orientated towards Japan). Bigger picure aside, the chart below looks like there is a nice run to 8600-8700 by the week end on the cards and accordingly we call an additional Trading Buy on the Nikkei at these levels.

Nikkei 10 day chart

Long @ 8400

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