Emergency Trend 338: Sounds the alarm due to a surge in Mothers futures volume [Tetsuo Inoue - Market Trends]

Emergency Tide 338: Alarm sounded due to surge in Mothers futures volume

Publication date: 2017/08/01 11:15

Emerging markets continue to fall.

In today’s stock market, the Tokyo Stock Exchange Mothers market has fallen for the fourth straight day, and the Nikkei Jasdaq Average has fallen for the third consecutive day. As of 10:31, the index declines are 2.05% for Mothers and 0.56% for Jasdaq; while Jasdaq’s decline is modest, compared with the closing price the day before (4/14) when the index bottomed and turned up, the Nikkei Jasdaq Average’s rise through last Thursday was 18.6%, larger than gains seen in other indices that rose notably during the same period, such as NASDAQ (9.9%), Hong Kong Hang Seng (11.8%), and Korea’s KOSPI (14.4%).

　The Jasdaq market, which had continued to rise after four rounds of profit-taking adjustments since February last year, is highly likely to have entered its fifth adjustment phase, so for the moment we issue a warning.

The Mothers market is more severely affected than the Jasdaq market.

After the previous day’s close, AnGes (4563), which announced the suspension of development of a gene therapy drug for lymphedema and the termination of development of the skin cancer treatment “Arobeckin” for solid tumors, appears to be leading the declines; however, on an index level, even before the NASDAQ shock, since 6/23 the market has remained notably heavy, and stocks with large margin debt show particularly lackluster price movements.

The drop in AnGes exceeded 12% as of 10:56, and the net margin balance, calculated as margin purchases minus margin sales, had risen to 14.77 million shares at the end of last week—the highest in the past year—contributing to panic selling. Until this unwinding finishes, both the stock and the Mothers index are in a “knife is falling from above” state, making it risky to trade carelessly.

What vividly reflects this situation is the futures market. The central near-month for the Mothers Index Futures is,Last Friday’s volume was 1,160 contracts, yesterday 2,196 contracts, and as of 11:07 today, the volume has surged to 2,592 contracts, exceeding yesterday’s daily total.For reference, the futures that were described at launch in this “Trend” as “the world’s most dangerous stock index futures” had a maximum ever volume of 2,847 contracts on their debut on 19 July last year, and today there is a strong possibility of surpassing that.

So, what is the usual level? Since futures trading began, the average daily volume up to yesterday has been 388 contracts, and volumes exceeding 1,000 contracts had occurred only 11 times up to last week. This shows how volatile the market has become.

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Tetsuo Inoue, 'Market Trends'
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