Japan's interest rate hike does not mean that it is safe to bottom-fish.
In the past couple of days, the most common saying in the market is:
"Wait for Japan's interest rate hike to land, and then it will be an opportunity."
However, looking back at previous interest rate hikes in Japan, one can find an almost counterintuitive fact – the truly difficult market conditions rarely happen on the day of the announcement.
Whether in March or July 2024, or January 2025, the day of the rate hike usually sees only a quick drop of 5%-8%, which looks like "bad news has been fully priced in" and easily triggers the first batch of bottom-fishing funds to enter.
The problem, however, starts right here.
In the following 2-4 weeks, the market enters a highly consistent phase:
volatility converges, the center of gravity shifts downwards, and the rebound is feeble.
Prices do not crash; rather, they slowly decline + sideways consumption, with trading volume continuously shrinking and sentiment being gradually drained.
This is not a market that gives courage,
but rather one that specifically consumes patience.
Structurally, it is also extremely similar:
First, there is a quick drop and recovery "needle," creating the illusion that "the bottom has been found";
Then, prices repeatedly grind along the needle's bottom, with bullish confidence gradually eroded;
Only when the last batch of bottom-fishing funds exits does the market truly complete its digestion.
Thus, Japan's interest rate hike is more like a "time-based negative factor,"
not resolved in a day, but using time to exchange for space.
In this structure, the ones most likely to get hurt are often not those chasing the rise,
but those who bottom-fish too early and cannot withstand the downward trend.
A more reasonable strategy is:
Be cautious during rebounds,
Gradually cash in on bearish profits in a weak market,
And do not rush to position on the bullish side before the trend has truly played out.
The market has never lacked those who dare to charge,
What it lacks are those who can wait for the rhythm to play out.
If you want to bottom-fish right now, first ask yourself:
In a market with two weeks of continuous downward movement, sideways trading, and no rebounds, can you really hold on?
If the answer is no,
Then there is no need to rush to prove yourself.
The true bottom never offers just one opportunity.
