July 7th Stock Market Review and Tomorrow's Entry Candidates
【Market Overview】Background of the July 7th Tokyo Market Plunge and Signs of a 'Capital Shift'
Today, on Tanabata, the Tokyo market was hit with a bucket of cold water. Although it started with high expectations as the previous day's US market remained firm, led by tech stocks, and some stocks hit record highs, the Nikkei Stock Average ended up with a significant consecutive decline once the lid was opened. It truly became a 'rainy Tanabata'.
Today's Market Highlights
Nikkei Stock Average: 68,256.96 yen (-1,480.73 yen from the previous day)
Market Sentiment: Selling led by semiconductor and tech stocks. It fell below the 25-day moving average (68,670.73 yen), suggesting a technical entry into an adjustment phase.
Sector and Stock Trends: 'AI vs. Domestic Demand' Split in Performance
What symbolized today's market was the 'outflow of capital from AI and semiconductor-related stocks that have led the market so far' and the 'shift toward domestic demand stocks'.
【Sectors with Notable Declines】
The burden on semiconductor-related stocks was the negative reaction to Samsung's earnings in South Korea. Although the semiconductor sector was buzzing with AI demand, profit-taking selling did not stop even with figures that exceeded market expectations.
Top decliners: Non-ferrous metals, metal products, machinery, electric appliances
Factors: Rather than benefiting from the rise in US tech stocks, 'selling on rallies' due to the sharp drop in Korean stocks and a sense of overheating became dominant.
【Sectors Showing Resilience】
On the other hand, it is worth noting that the decline rate of TOPIX was relatively small compared to the large drop in the Nikkei Average.
Gains/Relative Strength: Service industries and others performed well.
Notable stocks: Domestic demand and defensive-related stocks such as Sapporo, Bookoff Group, and Mizuno were picked up as trending stocks. A clear rotation movement of selling high-priced tech stocks and picking up lagging domestic demand stocks can be seen.
How to interpret this result?
Today's market might be better described as a 'positioning correction' rather than just a 'decline'.
The 'AI Market' Landing Stage:
Semiconductor and AI-related stocks have been pushing up the index, but investor psychology is working to 'lighten positions for now' due to excessive overheating. In particular, the situation where the trends of Korean semiconductor memory stocks are directly linked to Japanese tech stocks continues, highlighting a market environment easily swayed by overseas conditions.The Journey to Find a Safe Haven for Capital:
To the question 'If AI is no good, where should we go?', investors are beginning to prefer stable domestic demand stocks. It is more natural to view this as a 'change in market leadership' or a 'preparatory stage for cyclical rotation' rather than the market heading toward collapse.Future Points:
Technically, since it fell below the 25-day line, the possibility of a short-term adjustment continuing cannot be denied. Whether the closing price tomorrow, the 8th, can recover to a level that maintains a bullish signal (above 68,402 yen) will likely be a litmus test for measuring the 'strength of market sentiment' for the time being.
Finally
The Tanabata wish did not come true, and a wind of adjustment blew through the market. However, capital is not completely leaving the market, and capital movement between sectors is being actively carried out.
Rather than forcing yourself into overheated stocks, on a day like today, focusing on domestic demand stocks and lagging sectors with the perspective of 'what will be bought next?' might be the key to capturing the next upward trend.
Based on today's market, I have summarized tomorrow's entry candidates.
6638 Mimaki Engineering
Bullish (considering buying on dips)
Today's closing price is 1,988 yen (+51 yen, +2.63% from the previous day). It formed a long-bodied 'bullish candle' that was bought from an opening price of 1,940 yen and closed after rising to a high of 1,999 yen.
Although there was a scene where it was sold down to a low of 1,925 yen, it clearly rebounded from there, proving the strength of the desire to buy on dips. It is on the verge of recovering the psychological milestone of 2,000 yen, and if it clearly breaks through this, a return to an upward wave toward the 52-week high (2,237 yen) can be expected. However, if it is pushed by profit-taking selling just before 2,000 yen, there is a risk of re-adjustment to the 1,920-1,940 yen range that supported the low today. Trading volume is 149,100 shares, and there is no extreme sense of overheating, but a further increase in trading is desired for a breakout.
♣️Fundamentals
Indicators: The expected PER is 8.54x, which is left at an extremely undervalued level within the same sector and relative to the company's growth potential. The dividend yield of 2.52% also functions as a factor supporting the downside.
Background: The company, which has a global share in industrial inkjet printers, is easily conscious of solid demand in overseas markets in addition to the benefits of the exchange rate environment, and anxiety about the downside from the fundamentals side is limited.
♦️Specific Tactics for Tomorrow (Strategy)
Basic Strategy: Trend following (breakout) or aiming for shallow dips.
Entry: If the morning sentiment is strong, entry at the moment it clearly breaks above 2,000 yen, or after confirming a dip to around 1,950 yen, which is the recent support line.
Profit-taking/Stop-loss: The first profit-taking target is around 2,080 yen. The stop-loss line is set at breaking 1,920 yen, which breaks today's low and support zone.
8604 Nomura Holdings
Bullish (chasing the upside while being wary of high prices)
Today's closing price is 1,535 yen (+45 yen, +3.02% from the previous day). It rose significantly from an opening price of 1,509 yen, and at one point updated its 52-week high to 1,546.5 yen. Although it was pushed slightly toward the close, it is a strong 'bullish candle' that maintained the high price range. Trading volume is very active at 17,154,400 shares, suggesting that the inflow of capital from large investors is continuing. By capturing the 52-week high, the upside has become lighter, and if the overall market sentiment does not collapse, there is a possibility of entering a blue-sky mode where further gains can be aimed for. However, the area around today's high of 1,546.5 yen is also a point where a sense of achievement is easily reached. Also, due to the reaction of the sharp rise accompanied by trading volume, volatility (price fluctuation range) is likely to increase, and caution is required for profit-taking selling conscious of filling the gap (adjustment toward 1,500 yen) in the short term.
♣️Fundamentals
Indicators: Although it is being bought against the backdrop of PBR (Price-to-Book Ratio) reform and earnings recovery, the current expected PER is 12.90x and the dividend yield is 3.32%, which are levels that still retain attractiveness in terms of shareholder returns and ease of buying.
Background: The expansion of profit opportunities accompanying the lively domestic market and changes in the financial environment is a tailwind for the company, which is the leading major securities firm. Since it is easily a target for index buying, its advantage in terms of supply and demand continues.
♦️Specific Tactics for Tomorrow (Strategy)
Basic Strategy: Momentum investment chasing high prices. However, be wary of sharp drops.
Entry: After the selling settles immediately after the opening, entry after confirming that the downside is firm around 1,530 yen. Or, following up in a phase where it strongly breaks above today's high of 1,546.5 yen.
Profit-taking/Stop-loss: The profit-taking target is the 1,580-1,600 yen milestone. Stop-loss will be thoroughly set at the 1,500 yen milestone, which was today's psychological support, or at breaking 1,495 yen, where a clear gap-filling risk arises.
I hope this will be of some help to your investment decisions as one of the daily chart analyses.
Thank you for reading until the end 😊
Disclaimer
Please make final investment decisions at your own discretion.
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