The Nikkei fell over 4% overnight and has lost 19% from its mid-August high of 20946. The chart looks devastated and bound for additional losses. The gap lower suggests selling strength and the break below the early September low offers similar conclusions.
World shares tested record highs on Friday as hopes of more easy money from top central banks pushed Japan's Nikkei past 20,000 points for the first time in 15 years and European stocks reached similar heights.
According to Socionomic theory, social mood turns incredibly angry several years after a financial crash. This one is playing right up to every anticipation I’ve ever had when comparing to the panic of 1907 leading to the war.
The Bank of Japan has recently pledged to double its government bond holdings in two years, thus actually surprising the market with its extreme level of aggressiveness in trying to combat and reverse deflation that is plaguing Japan.