A consolidating market has also passed two months

A market that is difficult to break through on both the upside and the downside

The Nikkei Stock Average has risen above 19,000 yen on a closing basis as of 12/12

and since then, around year-end and New Year, a range-bound market has

been dragging on for two months.

From supply and demand dynamics, it has become a structure that is hard to fall, and while the downside is solid,

the fact that it “doesn’t fall” makes it harder for the upside to gain momentum when attempting to push higher.

over the past two months, when it has attempted to reach 19,500 yen, there are three instances,

but in each case, it has been rebuffed within two days.

(Intraday high above 19,500 yen)

12/20 19,511 yen12/21 19,592 yen

01/04 19,594 yen 01/05 19,615 yen

02/13 19,519 yen 02/14 19,501 yen

In addition, there were 13 instances where 19,400 yen level served as a high,

clear that 19,500 yen is a ceiling.

On the other hand, looking at intraday lows when testing the bottom,

it fell below 18,900 yen in three instances, as follows.

1/17 18,812 yen 1/18 18,650 yen

1/23 18,879 yen 1/24 18,783 yen

2/02 2/03 2/06 2/07

18,866 yen 18,830 yen 18,899 yen 18,805 yen

2/08 2/09

18,875 yen 18,874 yen

As shown above, it has fallen below 18,900 yen ten times,

but eight of those times it stopped in the 18,800 yen range.

As a result, once it surpasses 19,400 yen, the head remains heavy,

and below 18,900 yen, the downside is also solid.

Currently, volatility is low,

and given that the largest buyer is the Bank of Japan, it is clear that there is no significant risk of a large drop.

Conversely, artificially freezing the downside also creates drawbacks,

and it imposes a ceiling on upside movements.

For stocks to break higher, the yen would need to weaken toward the 116–118 range,

and a substantial net buying by foreign investors would have to resume,

which would be a condition for a rally, and even thenthe risk of a breakdown is less likely to appear globally unless

risk-off sentiment becomes concrete.

In index trading, whether you buy or sell, the market is difficult to capture gains in.

Japanese stocks tend to rise only when the yen weakens,

while, on the other hand, with improving corporate earnings and the BoJ’s presence providing a floor, there is little fear of a sharp stock price collapse,

so for now, a range-bound market is expected to continue,

and using options as a hedging strategy seems prudent,

which would be a wise choice.