Japanese Stocks Rallying as Predicted - ADRs to Watch Today

by: Steven Towns

A week ago I predicted Japanese stocks would rally, finishing the year on a high note. The Nikkei 225 opened last Wednesday at 15,680 and closed at 15,914. I believe it is psychologically important for the N225 (today's close: 16,076) to end higher than it finished last year (16,111; also the day prior and after it closed near 16,350).

I am still trading call options for December and January on iShares MSCI Japan Index ETF (NYSEARCA:EWJ) and now have started trading March too. So far I am up more than double from where I started last week. I still see upside through the end of the year, but will likely start to take some profits.

Note there was some heavy put action on Monday, especially for January contracts, but it seems that was a bad call!

Now, for ADRs to watch today:

ORIX (NYSE:IX) has the most potential upside based on its Tokyo close (factoring in an exchange rate of Y116.2/$1 and ADR:ordinary). It could trade up to 4.8% higher to $131.88, versus its close yesterday of $125.80.

Nomura Holdings (NYSE:NMR) could trade 3.8% higher to $16.82, versus a $16.21 close yesterday.

Nidec (NJ) at 3.4% higher to $19.02, versus $18.39.

Mitsubishi UFJ (NYSE:MTU) at 2.3% higher to $12.48, versus $12.20.

Those ADRs trading higher yesterday than their ordinary close today include: NIS Group (NIS) at $4.90 yesterday, versus an ordinary close today equivalent to $4.82. NIS was up 1.8% though in Tokyo. Also, Mizuho Financial Group's (NYSE:MFG) ADRs closed about 1% higher yesterday than their ordinary equivalent close today ($14.60 vs $14.46).

iShares MSCI Japan Index (EWJ) 1-year chart:


Disclosure: The author owns call options in iShares Japan and has long positions in NIS Group and Nomura.

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