Today’s Japanese Stock Market Strategy
Strategies
- Buy High-Tech Stocks
- Sell Banking Stocks
Explanation
The decline in US bond yields will undoubtedly be a tailwind for Japanese high-tech stocks. Therefore, it is highly anticipated to buy stocks that have been sold under significant pressure so far, as well as those that have strangely maintained their value.
Additionally, observing the decline in bond yields, it is considered safe to start selling banking stocks. As a premise, the morning futures market was trading high, and it’s a standard practice to start selling from the opening to capitalize on the gap-up in the spot market. Starting with selling banking stocks and carefully monitoring the overall market direction is advisable.
As mentioned earlier, buying stocks outright from the morning carries high risks. While there are cases where stocks continue to rise from the morning, it is safest to buy after breaking the intraday high. Anticipating the release of accumulated selling pressure, it is recommended to primarily engage in selling transactions and then switch to buying as the market sentiment changes around midday.
Review of Today’s Japanese Stock Market
Prominent Movers
- High-Tech Stocks
- Mothers Index
- Nidec Corporation
Explanation
The Nikkei average, which was around 31,200 yen in the morning, plummeted in a straight line to the 30,500 yen range as soon as the market opened. It hit the day’s low around 10:30 AM and then rose steadily until the market closed, recovering most of the losses. While it was expected that selling pressure would emerge, I was honestly surprised by the extent of the decline, which even broke yesterday’s low.
In the morning, stocks such as Nidec, which missed earnings, and Kawasaki Kisen, which received a downgrade in ratings, were noticeably declining. Bank stocks also faced strong selling pressure after a brief uptick. Around 10:30 AM, a rebound started, mainly led by high-tech stocks. Mothers stocks, in particular, rose significantly and led the market.
Large-cap stocks, prominent high-tech stocks like Benefit One, GMOPG, and Monotaro experienced notable selling, while small-cap stocks were represented by Mothers market-listed companies.
Approximately 1,000 stocks hit their 52-week lows. However, many of these stocks had long lower shadows, indicating the possibility of a market reversal. It seems like a good day to anticipate a market turnaround.
Conclusion
Trading with the October lows as a reference point seems prudent.
