Japan's Record Shorts Hint Stocks Have Finally Bottomed
Comment of the Day

October 25 2018

Commentary by Eoin Treacy

Japan's Record Shorts Hint Stocks Have Finally Bottomed

This trading note from Bloomberg may be of interest to subscribers. Here it is in full:

Japanese stocks may have finally bottomed after the ratio of short bets on shares trading on the Tokyo Stock Exchange climbed to a record high. Spikes in bearish bets indicate extreme pessimism and can lead to a short squeeze if stocks rebound, driving up prices further. When the ratio reached near current levels in March, it marked the start of a 9 percent rally over the next two months for the Topix index. The gauge has since lost all those gains and is trading near a one-year low amid growing concerns over upcoming corporate earnings and a slowdown in China’s economy.

Eoin Treacy's view

The Nikkei-225 broke below the trend mean in a dynamic manner this morning in sympathy with the wider corrective phase evident on major stock markets globally.

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