Profit / Loss Of Japanese Margin Traders
APPLICABLE TIME FRAME(S):
INTERMEDIATE
UPDATE SCHEDULE:
Weekly
REPORTING DELAYS:
3 days
EXPLANATION:
The Tokyo Stock Exchange releases information weekly about trades on their exchange. One piece of datum is the performance of traders buying and selling stock on margin.
The indicator is a sum of the net profit (loss) of transactions conducted on margin on the TSE. Traditionally, traders on margin have shown a net loss, with rare gains.
GUIDELINES:
It has been rare for margin traders to show a net gain from their transactions, and when they have, it has been more of a sign of an impending market peak than anything.
We use an upper line of -5% to highlight period when times have been too good to margin traders, and typically the market has sold off after reaching that threshold. Conversely, when margin traders have shown heavy losses of -20% or more, then usually the equity markets have been at or very near a tradable bottom.
ADDITIONAL RESOURCES:
Tokyo Stock Exchange (http://www.tse.or.jp/english/)
© 2009 Sundial Capital Research, Inc. All Rights Reserved.