The Dow Jones surges ahead, hitting 40,000 (May 16, 2024)

Preface: The Hong Kong stock market was closed for a public holiday yesterday, but the U.S. stock market was extremely active, with the Dow Jones Industrial Average nearing 40,000 points...

U.S. Market Update

At the time of writing, $Dow Jones Industrial Average(.DJI.US) has already surpassed 40,000 points. When the Dow breaks 40,000, my gut tells me it's not time to buy but to sell. A few months ago, after the Nikkei broke 40,000 points, it briefly retested 38,800 before rising again, even reaching a high of 41,000 points. However, the Nikkei soon fell back. Japanese stocks declined intermittently for a month, finding support only at 36,700—a drop of 4,300 points. Will the U.S. market replay the Nikkei's script? I don't think it'll be identical, but there will surely be similarities.

It's time to short U.S. stocks.

Hong Kong Market Update

$Hang Seng Index(00HSI.HK) opened higher this morning but briefly softened before quickly regaining upward momentum. It closed up 303 points at 19,377, with turnover reaching HKD 204.9 billion.

Strategy

It feels like ages since the Hong Kong market last saw HKD 200 billion in turnover. Higher turnover tends to attract inexperienced investors: some people always look at trading volume to guess market trends. From what I understand, the amount of turnover doesn't necessarily reflect real trading activity. So, will this HKD 200 billion turnover lure in a wave of naive investors chasing the numbers? If so, then the current rally in $Hang Seng Index(00HSI.HK) is probably nearing its peak.

Before the holiday, $TENCENT(00700.HK) and $BABA-W(09988.HK) reported earnings—one beating market expectations, the other falling short. Naturally, this morning, the former rose 4%, while the latter dropped 4%. However, with the Dow breaking a key psychological barrier tonight, I believe all stocks, including underperforming Alibaba, will see significant gains in the short term.

(The views expressed above are solely my own. None of the investment strategies provided herein may be suitable for everyone, nor should they be construed as an invitation or intent to buy or sell any financial product. Securities prices can rise or fall, even becoming worthless. Trading securities does not guarantee profits and may result in losses. Investors and clients should exercise caution and consider this as just one of many factors in their investment decisions.)