The market is moving amid continuing short-term turmoil, with sentiment remaining uncertain. In the medium term, a lack of themes is unsettling the market, and the outlook remains unclear ahead of President Trump’s midterm elections.
The short-term market remains in turmoil, with sentiment showing no clear bullish or bearish direction and traders themselves moving without being able to discern the market’s direction. The Nikkei 225 has formed a range from the ¥65,000 level to ¥68,000 and has at times tested the ¥70,000 level on rebounds, but it has repeatedly plunged and rebounded sharply, resulting in wide daily price swings. As of the 15th, it had posted a substantial decline from the previous day, and some market participants viewed the market as having broken down.
The medium-term market is described as being determined by sentiment, with 1 sentiment defined as one unit of a trend. Although the Nikkei 225 may rise and fall again during the period, the medium-term trend depends on themes. At present, themes such as AI and semiconductors are weak, and the market lacks a new medium-term theme. It is said that the market’s interpretation of earnings, rather than their substance, is driving market movements.
Short-term market-manipulation groups known as “ijiriya” are particularly powerful when sentiment is weak and have the ability to push the market up and down. The reversal on October 7 was influenced by the Chinese National Day holiday, and the Japanese market is being driven by movements in the US market and interpretations of news. Timing is considered more important than price levels when exiting positions, and individual investors are being urged to adopt a cautious strategy.