Let's take a quick look at the closing of#USstocks in the early morning. The S&P and Nasdaq fell, the Russell 2000 led the gains, and the Dow Jones followed closely behind.
A friend asked me about this today, so I'll explain it here.
The Russell 2000 is part of the Russell 3000 Index, but unlike the Russell 3000, the Russell 2000 records companies with smaller market capitalization in the U.S. stock market and can be regarded as the small-cap stock market.
The Dow Jones Index is the oldest U.S. stock index with the widest coverage, and also represents the rise and fall of the real economy.
Why should we pay attention to US stocks? Why should we pay attention to Russell and Dow Jones?
1. After the AI technology stocks fell last week, although the crypto market did not follow the U.S. stock market, the U.S. stock market can still reflect the investor sentiment during U.S. trading hours. For example, the initial decline on Wednesday and Thursday this week showed that U.S. investors were pessimistic, especially on Wednesday. The sentiment during U.S. trading hours was weak, and the U.S. stock and crypto market fell at the same time. It was not a follow-up decline, but the investment sentiment was really not high.
2. The reason why we pay attention to Russell and Dow Jones is that they are used as a basis for judging the market risk sentiment in the current stage of the correction of technology stocks. If the market falls generally, and the S&P and Nasdaq lead the decline, it proves that the overall risk investment sentiment is relatively poor. On the contrary, if the S&P and Nasdaq fall, while the small-cap Russell 2000 and the real sector Dow Jones rise, it means that the investment sentiment is active, and funds flow out of large-cap technology stocks and flow into small-cap stocks and the real industry.
Because the bull market in the U.S. stock market since last year was driven by the technology sector, and it was under high interest rates and high inflation. Recently, the probability of Trump's victory has increased. Many people believe that the U.S. economy will be better in the future. With interest rate cuts and lower inflation, more people may withdraw funds from technology stocks and invest in small-cap stocks or real enterprises because they are still at a relative bottom. After the interest rate cuts, the economy will rebound quickly and profits will be better.
Therefore, once the Russell is formed, the Dow Jones Industrial Average rises and other stock indexes fall, it proves that risk sentiment is good and risk markets in other areas will usher in capital flows out of technology stocks.
At present, the overall flow order of funds in the United States is:
Technology stocks → Small-cap stocks/real stocks → ETF (stock type) → ETF (crypto type) → crypto market,
The core of this flow process is that the market lacks liquidity under high interest rates, or a lot of silent capital is inactive. Similar to the trend of cryptocurrencies from last year to this year, it is often only after#BTCrises sharply that high-level turnover occurs, and the extra profitable funds will go to the copycat market, the first-level local dog market, or the MEME market.
However, the above judgment of the US stock market is only temporary, not a fixed thinking logic, and is only suitable for the current stage. After the second quarter earnings season of the US stock market, technology stocks will inevitably rise again. After all, the previous wealth creation effect was too good. At that time, this thinking will change, and then I will interpret it according to the situation.
