During the recent rally on the Tokyo Stock Exchange, the 225-issue Nikkei average broke the 11,000 resistance line.

The key market gauge soared 638 points to end at 11,450.22 on March 4, and has since been within touching distance of 12,000, a level unseen since early August.

The rebound followed a double-bottom price -- a support level on the chart -- reached on Feb. 6, when the Nikkei average plummeted to 9,420.85, falling below the Sept. 17 mark of 9,504.41.

The Tokyo market has since climbed past one major threshold after another.

The trigger for the rally was a package of antideflation measures announced by the government on Feb. 27.

Skepticism abounds, however, with regard to concrete measures to counter deflation. As one business leader observed, the package lacked measures aimed at bolstering domestic demand.

The government has also sidestepped the issue of how it plans to revise the nation's tax system. Now that the fiscal 2002 budget has cleared the Lower House, tax breaks and a supplementary spending plan may shortly come up for debate.

The market is looking for clues as to whether the government will support raising the gift tax exemption for home purchases -- now limited to up to 5.5 million yen -- to around 30 million yen.

If the government intends to help liquidate idle land, real estate acquisition taxes should be abolished.

The market is looking to the government to follow up on its Feb. 27 package.

Earlier this month, the market reacted positively to a report that debt-ridden Sato Kogyo Co. had filed for court protection from creditors.

This failure of a contractor was taken to indicate that the disposal of bad loans by banks is now well under way.

It is still unclear, however, as to whether the nation's major banks can keep their minimum capital-to-assets ratio from falling below the internationally required 8 percent without seeking further injections of public money.

Unless the disposal of nonperforming loans is completed, occasional rebounds in Tokyo stock prices could soon run out of steam.

All told, the Nikkei average could be facing a resistance line at around 12,000 by the end of this month.