Eoin Treacy's view The adoption of an inflation target by the Bank of Japan earlier this year initiated some much needed Yen weakness against a host of currencies. However this has been resisted at every turn by the governor of the Bank of Japan. While the stock market has pulled back sharply over the last few weeks, the Yen has been comparatively steady in the region of ¥80 when compared to the US Dollar. A sustained move below ¥79 would be required to question medium-term scope for additional Dollar outperformance. I last reviewed Japan's upside leaders in Comment of the Day on March 9th . Following a volatile period for the stock market I thought it would be opportune to revisit those shares. Also see David's piece on Japan yesterday.

In the automotive sector Isuzu Motors, Hino Motors, Unipres Corp and Kyokuto Kaihatsu had become quite overextended relative to the 200-day MA by early April but pulled back over the last month and have returned to test the region of their respective trend means. Provided they find support in the current area the benefit of the doubt can continue to be given the medium-term upside. Autobacs Seven has outperformed somewhat while Press Kogyo has overshot somewhat. Mitsuba Corp failed to sustain the breakout to new four-year highs and has fallen abruptly to test the lower side of the more than year long range.

In the Distribution/Wholesale Meiwa Corp more than quadrupled between January and late April and is now unwinding the extreme overbought condition. Emori & Co Ltd, Kagome, Yamazan and Maruka Machinery have either unwound overextensions relative to the 200-day MA or are in the process of doing so.

Spk Corp failed to hold the breakout from the lengthy base formation. It will need to find support soon if the medium-term progression of higher reaction lows is to be sustained. Nakayamafuku failed to hold the breakout to new highs and has pulled back into the underlying base.

In the consumer sector, and in common with a number of the companies we describe as Autonomies, Pan Asian Dividend Aristocrat Uni-Charm (0.76%), has become quite overextended relative to the 200-day MA and is susceptible to mean reversion. Japan Tobacco is also a Pan Asian Dividend Aristocrat (2.89%) and has almost completed a reversion towards the mean. Chiyoda Co. (2.90%) has rallied impressively over the last couple of months but now appears to be in the process of unwinding the short-term overbought condition. Nikon Corp has been consolidating mostly below ¥2500 since late March and a sustained move below the 200-day MA would be required to question medium-term upside potential. Astellas Pharma and Hitachi have both returned to test the region of their respective 200-day MAs.

The above shares represent some of the Japanese market's relative strength leaders. A significant number have returned to potential areas of support following a more than month long reversion. This represents where demand will need to return to dominance if the consistency of medium-term uptrends is to remain intact.