2025.10.08

The Cracks in the Rally: Signs of a Trend Breakdown in Japan’s Nonferrous Metal Stocks

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The Heat Before the Cooldown

Japan’s equity market has been on fire — the Nikkei 225 is now approaching the symbolic 50,000 yen level, fueled by euphoria over policy continuity and optimism around AI-driven innovation.
But while the headlines are glowing, a few sectors are quietly flashing early warning signs — none more clearly than nonferrous metals.

Stocks like JX Advanced Metals (5016) and Mitsui Mining & Smelting (5706) have surged to unsustainable levels, mirroring the overheating seen in other speculative areas of the market.
When euphoria runs this deep, even the best charts start to lose their rhythm.

On October 7, the market experienced its first notable correction in three months of relentless bullishness. In particular, the sharp, high-volume sell-off in JX Metals around 2:15 p.m. was striking — the day’s total trading volume reached 86,486,800 shares, the highest since March 19, 2025 — the fourth day after listing. Personally, I don’t believe today’s intense selling means that short-term bearish positions have been fully unwound.

Chart: TradingView (JX Advanced Metals, 1-minute). Captured on October 7, 2025.

“After months of relentless buying, even the strongest sectors need to breathe. What we’re seeing now in nonferrous metals may be the first meaningful pause before momentum cools.”

Technical Outlook: JX Advanced Metals Remains in a Parabolic Trend

No signs of classical exhaustion yet. Volume expanded sharply on the October 7 session, reaching 86.48 million shares, the highest since the listing’s fourth day in March 2025.
Trend remains firmly parabolic, with the 5-day moving average still rising steeply and no visible negative divergence on RSI.
Intraday structure showed aggressive selling around 14:15, but the closing price held above short-term support near ¥2,050 — suggesting short covering rather than a full reversal.
Key focus ahead: whether follow-through selling emerges below ¥2,000 or dip buyers step in again.

Market Psychology – The Peak of Euphoria

Every market top shares the same emotional DNA.
When traders stop asking “Is it too high?” and start saying “They’re pricing in years of future growth,” the clock starts ticking.

Retail investors are now chasing themes like battery materials or copper demand from EVs without even checking valuation multiples.
It’s not about fundamentals anymore — it’s about momentum and belief. And belief always has a limit.

Conclusion – The Calm Before the Next Phase

None of this means a crash is imminent.
But the risk-reward profile has inverted: upside is shrinking, downside is expanding.
If both JX Metals and Mitsui Mining break short-term support simultaneously, the momentum reversal could accelerate faster than most expect.

For now, discretion is the better part of valor.
After such a parabolic rise, investors should remember that once a stock begins to correct, it can take a long time to recover.
What’s clear is that we’re entering a phase where buying requires far more caution than before.