CHAPTER 1 · CHECK FLIGHT

Can You Read the Market Sky?

Answer five questions to check whether you can separate movements in the whole market, a sector, and an individual company.

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QUESTION 1

Your stock falls 2.0% while the Nikkei 225 falls 2.1% and most sectors are lower. What should you consider first?

The company must have released bad news.The decline may mainly reflect weakness in the overall market.The stock should be sold immediately.

Answer: B. When the stock moves by roughly the same amount as the market, first test the market-wide explanation before assuming a company-specific problem.

QUESTION 2

The Nikkei 225 is rising, but declining stocks greatly outnumber advancing stocks. What does this suggest?

Every part of the market is strong.Trading volume no longer matters.A small group of influential stocks may be lifting the index.

Answer: C. An index can rise even when the advance is narrow. Market breadth tells us how widely buying has spread.

QUESTION 3

Why examine trading value and volume together with price?

They indicate how much participation and capital support the move.They guarantee what the price will do tomorrow.They replace the need to examine the market and sector.

Answer: A. Price shows direction; trading activity helps reveal the energy and participation behind that direction.

QUESTION 4

A defense stock rises together with most other defense companies. Which explanation should be examined?

Only the company’s own news can explain the move.Capital may be flowing into the defense sector as a whole.The broad market indices must be falling.

Answer: B. When peers move together, sector-wide capital flow may be part of the explanation.

QUESTION 5

Which observation order best follows the NIGHT FLIGHT method?

Individual stock → rumor → marketSector → individual stock → stopWhole market → sector → individual stock

Answer: C. Begin with the largest sky and gradually narrow the field of view. This helps separate market, sector, and company-specific causes.

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