Today’s Japanese Stock Market Strategy
Strategies
- Sell oil-related stocks
- Sell technology stocks
- Ride the rebound
Explanation
The sentiment appears extremely negative, to the point where a rebound could occur at any moment, but fundamentally, the intention is to trade from a selling perspective. It would be wise to trade high-tech stocks that are in a strong downtrend each time they hit new lows. GMPOPG and M3 are potential targets.
Selling oil-related stocks is the top priority because movements in the U.S. market felt unexpectedly bearish. While they might open lower, it wouldn’t be surprising if selling continues from there. In a market where overall sentiment is at its worst and stocks that should rise are falling, it’s essential to follow this trend. INPEX seems like a good candidate for selling.
Going in for buys in a strong downtrend situation is risky. Whether in individual stocks or at the index level, crossing the 3-day or 5-day moving averages would be an indication that some selling pressure has eased. It’s crucial not to rush into buying but to trade cautiously while monitoring price movements.
Review of Today’s Japanese Stock Market
Prominent Movers
- Mothers Index
- Technology sector in general
Explanation
Early in the morning, there seemed to be a stable decline in stocks, but it was given up when the rise in U.S. bond yields was observed. Mothers Index experienced a nearly straight decline throughout the day, dropping by over 3%. This decline reached the lowest level calculated since the Tokyo Stock Exchange began calculating the new Growth Market Index in June last year. Considering it’s already down by 25% from its high in June this year, selling off further from here is quite intimidating.
On the other hand, looking at TOPIX SMALL GROWTH, there isn’t as much undervaluation as in the Mothers Index. The question arises whether to overlook buying the inherent flaws of the Mothers Index or to buy individual small-cap growth stocks that have been abandoned. It’s necessary to calmly assess the situation.
In short-term trading, sentiment has become crucial. When the decline becomes significant, all sorts of advice become ineffective. Careful observation of Twitter, forums, and Reddit might yield the most promising results.
Conclusion
Manage positions while considering various indicators and engage in short-term trading based on sentiment.
