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Nikkei Falls more than 3 Percent Monday

After its epic 7 percent drop last week, the Nikkei fell again in Monday’s trading session. The Japan index fell 3.2 percent or 469.80 points to 14,142.65. According to Reuters, that’s below its 25-day moving average at 14,333.11 but didn’t break 13,990–its 61.8 retracement of its fall from February 2007 to October of 2008.

Why the fall today? The prevailing theory is that it’s follow through from last week’s fear that the United States Federal Reserve would back off on its bond buying program along with fears stemming from weak Chinese data.

The majority of U.S. strategists don’t believe that the Fed has plans to put the breaks on QE. The S&P had a choppy session last week but ended Friday nearly unchanged for the week. Investors proved that the buy on the dip mentality is still in place as buyers came in the day after the market fell.

Others believe that the Nikkei is experiencing a period of technical correction that could take it much lower. Yasuo Sakuma, manager at Bayview Asset Management told Reuters that he expected the index to fall another 8 percent below Monday’s close. He’s looking for 13,000.

“Just before the sharp decline on Thursday, I have been decreasing equity positions and increasing cash position. I cut back on equity positions further from last Thursday.”


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