Big market! US stocks fell sharply last night, and cryptocurrencies fell sharply this morning. Let's break down the whole story.
The trigger for the sell-off was some company earnings reports. First, Tesla was the easiest to understand. This company always talks a lot but doesn't do well, so it's not surprising that the earnings report was below expectations, and the stock price naturally fell sharply. But what really drove the sell-off was Google. Although Google's earnings report was okay, the problem was the old saying, "buy the rumor, sell the fact." Stocks like Google have been strong all year, and investors think this is a good opportunity, so why not take some profits? Last night, there was another thing that scared investors. Former Federal Reserve Governor Dudley and Goldman Sachs both said that interest rates needed to be cut in July, and the market was scared because of this. What happened? Is the economy so bad? Is it going to slow down faster? So they also took the opportunity to flee the stock market. Blackstone Group also had bad news. Its real estate investment trust cut its dividend, which made people feel that the economy was getting worse at an accelerated rate. Of course, there was also the closing of the yen carry trade we talked about yesterday. All of the above things add up to a sell-off across the board in the U.S. stock market. Technology giants have been hit hard, growth stocks have been hit hard, and small-cap stocks have also fallen. The VIX index has jumped to more than 18. I think there is still room for growth. 18 means that the implied volatility of the S&P 500 is only about 1% within a day. The Nasdaq may still have room for a correction in the next few months, so I will continue to pay attention.
Another important point is that when the stock market has a moderate decline, safe assets such as bonds and gold will have some kind of rebound, but when the market fluctuates violently, all markets tend to move in the same direction, so later on, US bonds, gold and cryptocurrencies all turned down. Industrial metals such as silver and copper have been weak recently and have been shorted on rallies. The overnight trend of gold is very interesting. The decline in US bond yields has supported the rise of gold, so there is a risk-off trading sentiment. But as US stocks continue to fall, volatility has skyrocketed, and the Nasdaq fell by more than 3%. At this time, the correlation turned to 1, and everything began to sell off. Both US bonds and gold fell, which is common when extreme volatility occurs. Therefore, gold was sold below 2,400 this morning, and many Asian traders suffered. They sold very aggressively this morning. In terms of silver and copper, silver plummeted in the Asian session this morning. About two months ago, when silver was close to the high, I said that there were big players trying to squeeze silver higher, so I bought silver put options expiring in July and August, because I felt that they would eventually be forced out. I think there was not only forced selling this morning, but there were also these big players that were forced out because their trades failed and silver didn't bounce as expected and now they have to flee. This makes things interesting and could give us some trading opportunities, and I will continue to update internally. I think copper is still weak and the outlook for these industrial metals remains poor. Cryptocurrencies were also sold off in the Asian morning for the same reason as before.
If you saw my analysis of the yen yesterday, you should have dodged this. Going long on the yen means going short on the dollar. My short-term target at the time was 154, but I didn't expect it to be reached so quickly. This morning, the USD/JPY fell below 153 and entered the 152 range, which is very surprising. The yen has appreciated faster than expected. There are a few reasons behind this. I mentioned the exit of the carry trade before, which has definitely happened and is definitely one of the reasons driving the appreciation, as well as the intervention of the Bank of Japan and the market starting to price in a rate hike next week. The Bank of Japan meeting next week is very important, so in the short term today and tomorrow you can see further gains in the yen, which means that the USD/JPY will continue to fall, but I think the situation will change next week. The risk is that the Bank of Japan does not raise interest rates, which may cause the yen to reverse, so I will continue to follow up and will re-evaluate next week.
In short, the market fluctuates greatly, creating many opportunities for traders, and we need to continue to pay attention to these markets. Yesterday, $STMX was the first in the gain list again. It is not common to be the first in the gain list for two consecutive days. It is also a successful full-time job. Due to the large position, only a 10x chart can be displayed.
Let’s take a look at the short positions of the internal partners, as shown in Figure 1. And my short position is shown in Figure 2.
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