Swings in U.S. stocks always hit here hard, but lingering concern about the health of Japan's banking system is the main factor weighing heavy.

For the Nikkei to go up further, gains need to become more broad-based.

The recent loss in Tokyo was triggered by factors like the reshuffle of the Nikkei components and tumbles in U.S. shares. It has nothing to do with economic fundamentals in Japan, which have not worsened at all.

I see levels below 17,500 as very attractive for bargain-hunting.

Given Japan's shaky political and financial situation, the market will continue to produce such knee-jerk reactions to stock movements in the U.S..

When there's considerable uncertainty in the market, like there is now, banks lead the decline.