Eoin Treacy's view Three prime ministers in as many years has shaken confidence in the ability of the DPJ to govern which has allowed the LDP to regroup. Mr. Abe, who is likely to be the next prime minister, is a noted nationalist but more importantly is a vocal advocate of easier monetary policy. In addition to his premiership, the post of governor of the Bank of Japan will be open from next April and Mr. Abe is likely to appoint someone who shares his views.

The Yen weakened sharply following yesterday's announcement of an election. While many people will be focused on USD/JPY the commonality of the Yen's decline is notable and should act as a tailwind for the stock market. The Deutsche Bank JPY Trade Weighted Index has been trending higher since late 2008 but has lost momentum over the last year. It retested its peak near 150 in July and has held a progression of lower rally highs since. It extended the decline both today and yesterday. A sustained move above 145.60 would be required to question medium-term scope for further downside. (Also see David's piece in Comment of the Day on November 2nd.)

I last reviewed Japan's leading shares in Comment of the Day on May 16 th when a number had begun a progress of mean reversion following impressive breakouts in May. Here also is a list of Japanese companies that have hit at least new 2-year highs in the last five days.

In the automotive sector Isuzu Motors has been ranging in the region of ¥400 for the last few months and broke out of this congestion area two weeks ago. A clear downward dynamic would now be required to question medium-term scope for continued upside. Hino Motors completed a seven-month range three weeks ago and a sustained move below the 200-day MA would be required to question medium-term scope for additional upside. Shinmaywa Industries completed a four-year base three weeks ago. Kyokuto Kaihatsu pushed back above the 200-day MA three weeks ago and a sustained move below ¥650 would be required to question medium-term scope for continued upside. Unipres Corp, Autobacs Seven, Press Kogyo and Mitsuba Corp all pulled back below their respective MAs and while they have steadied over the last few weeks, they will need to hold above their respective October lows if potential for some additional upside is to be given the benefit of the doubt.

In the Wholesale and Distribution sector SPK Corp and Nakayamafuku Co Ltd have been mostly rangebound over the last six months but continue to hold a medium-term upward bias. Sustained moves below ¥ 1275 and ¥ 575 would be required to question medium-term scope for continued higher to lateral ranging.

In the consumer sector, S&P Pan Asia Dividend Aristocrat Uni-Charm has returned to test the lower side of its six-month range and is currently in the region of the 200-day MA. It will need to continue to find support in the area of ¥ 4075 if the medium-term upside is to continue to be given the benefit of the doubt. Japan Tobacco has also returned to test the region of the 200-day MA. Chiyoda continues to hold a progression of higher reaction lows but is susceptible to mean reversion. Astellas Pharma found support in October near ¥ 3750 and a sustained move below that level would be required to question medium-term scope for continued upside.

In the bombed out utilities sector, Kansai Electric Power has at least paused in the region of ¥ 500 and is now pressuring the upper side of the 3-month range.

In the banking sector, Shinsei Bank is particularly noteworthy. It hit a new 30-month high this week and a clear downward dynamic would be required to question medium-term scope for additional upside. Suruga Bank appears to be in the process of completing a four-year base.

In the industrial automation sector where Japanese companies are dominant, Fanuc continues to sustain a medium-term upward bias. THK has found at least short-term support in the region of ¥1200. Omron Corp is rallying, having found support near ¥1500. Chiyoda Corp has paused in the region of ¥1200 following an impressive advance but a sustained move below ¥1050 would be required to question medium-term scope for continued upside.

The Japanese stock market has been a serial laggard over the last few years as the strength of the Yen weighed on the competitiveness of the export sector. If, as appears likely, the currency continues to weaken from here, what has previously been a headwind will become a tailwind.