The Tokyo stock market saw the Nikkei Stock Average plunge \822 to \51,063 on the 31st, marking its fourth consecutive day of decline. The market continues to be whipsawed by news flows, making it difficult for investors to keep pace with the violent swings. Trading resembles a roller coaster ride through darkness where the tracks ahead are completely invisible. This morning, pre-market movements in Nikkei 225 futures were disheartening, and the Nikkei indeed opened \500 lower, gradually deteriorating further to fall more than \1,300 at one point. However, just over 30 minutes after the opening, futures suddenly surged, with the Nikkei following suit. Those holding short positions betting on turbulent trading were likely caught off guard.

The trigger was a Wall Street Journal report that U.S. President Trump stated he was prepared to end the war even if the Strait of Hormuz remains closed. This news flow likely set off AI-driven headline trading algorithms running in all directions. The drop in crude oil futures and surge in U.S. stock index futures naturally led the Tokyo market to follow this risk-on sentiment. However, crude oil markets quickly stabilized and risk appetite receded. Despite the U.S. attacking Iran in hopes of replicating the Venezuela success, resulting in the effective blockade of the Strait of Hormuz, some analysts noted that "withdrawing while leaving the situation unresolved would signify a loss of U.S. credibility." Furthermore, it appears that the Nikkei's return to downward exploration, despite U.S. stock futures maintaining their gains, reflected concerns that leaving the Hormuz blockade unresolved would primarily hurt Asian nations like Japan and South Korea.

While there should be stocks worth buying at current levels, finding them is challenging. The impact of rising crude oil costs on corporate earnings remains uncertain, and attempting to identify fundamentally sound stocks at attractive entry points through traditional analysis risks being blindsided. Consequently, individual stock selection inevitably extends the momentum trading approach, focusing on capturing thematic investment flows.

However, extracting stocks from previously popular themes such as AI, semiconductors, data centers, rare earths, and defense is difficult in the current timeframe. Stocks that have already rallied?those that have already bloomed once?are viewed as attractive dip-buying candidates in early stages, having absorbed significant buying interest while awaiting a second flowering. While the recent market decline was certainly triggered by Middle East tensions, the underlying issue that should be highlighted is deteriorating stock supply-demand dynamics. For stocks that have gradually declined after absorbing substantial buying, holders' sentiment shifts from greedily pursuing profits to wanting to "quickly eliminate paper losses and move to the next action." In other words, the ideal of patiently enjoying a sustained recovery is eclipsed, and as overhead resistance increases, investors become preoccupied with selling into rallies to escape. Therefore, if allocating capital to such stocks, the standard approach is to wait until capitulation selling emerges.

For new investors, rather than directing funds toward previously popular stocks that have created overhead supply, it is better to seek opportunities in fresher themes. For example, "evacuation shelters" is functioning as a novel theme. While the topic is unsettling, if global geopolitical risk preparedness becomes socially conscious and is implemented with policy support, it has sufficient impact to attract investment capital in the stock market. Late this month, it was reported that "the government aims for 100% population coverage of evacuation shelters against missile attacks in all municipalities by 2030." Even if the scenarios requiring such shelters lack immediate realism, their necessity cannot be denied when conceptualized as giant fire extinguishers.

S E Corporation <3423>, which manufactures and sells high-strength concrete, saw sudden popularity surge. Originally a stock with heavy price action relative to its market capitalization, its character completely changed in a single day as investment money pounced on it as a low-priced stock capable of handling volume. Additionally, Giken Holdings Co.,Ltd. <1443>, which possesses fundamental technology in radiation shielding construction, shows signs of stirring. Sanyo Homes Corporation <1420>, which handles home shelter sales and installation, also saw moments of significant upward price chasing. Investment capital may also turn toward AIRMAN CORPORATION <6364>, which handles emergency generators and air supply systems for shelters. Nippon Tungsten Co.,Ltd. <6998>, with its tungsten-based radiation shielding sheets, is also a regular in this theme and considered a prime target for investment.

On tomorrow's schedule, the Bank of Japan's Tankan survey for March will be released before the morning session opens and is drawing high market attention. During the afternoon session, March new vehicle sales (JADA) and March mini-vehicle sales (JMDA) will be announced. Overseas, China's Caixin manufacturing PMI for March and Eurozone unemployment rate for February will be released. In the United States, market focus will be on the ADP National Employment Report for March and retail sales for February. The ISM Manufacturing Index for March and business inventories for January will also attract attention.