The Japan 225 Index (tracking the Nikkei) traded above 20,000 this morning, for the first time in more than 15 years. The index is now up more than 150% in just over two years. The commitment of PM Abe's government, working hand in hand with the Bank of Japan, is paying off for share investors.

Here's the big picture:

20150410 japan

The monthly charts show just how much the situation has changed. Where to from here?

A lot still depends on the "three arrows" stimulus program. While prices have shown some signs of life, and industrial production has lifted modestly, there is little evidence to show that the lift in economic activity has reached a level that is self-sustaining. The BoJ's stimulus injections are on hold at the moment, but may resume once regional elections are held later this month, potentially lending further support.

Valuation issues are militating against further gains in the long term. The trailing PE for the index is around 23x. The dividend yield is about 1.25% - not bad where interest rates are at zero, but weak compared to other regional indices. Of course, if growth returns and corporate earnings pick up significantly, these ratio swill improve significantly.

In big picture terms, traders may look for a consolidation phase, where daily swings remain larger but the overall direction is sideways. The inside range for these may be defined by the support resistance levels at 18,300 and 20,800. The wider range may be described by the Fibonacci projections at 17,600 and 21,600. At the moment, the MACD is indicating ongoing positive momentum, which may see a test of the zone between 20,800 and 21,600.