U.S. stocks opened higher but closed lower again, yesterday's strategy was confirmed
Today's Views and Strategies:
Yesterday, the three major U.S. stock indices were under dual pressure from moving averages and resistance levels, opening higher but closing lower again during the session, indicating weak bullish momentum. Additionally, after-hours and overnight, the U.S. government first announced export restrictions on NVIDIA's H20 chips, followed by a statement imposing 245% tariffs on China, triggering another market decline. The volatility index futures surged 7.25% overnight.
Regarding gold, multiple brokerages have raised their target prices again, pushing gold to new highs. However, caution is advised when adding positions. While the gold thesis remains intact, recent gains have been overly influenced by sentiment, with the 20-day deviation of the gold main chain nearing historical highs. Profit-taking pressure may emerge, so consider reducing positions and buying on dips.
For now, the medium-term outlook for U.S. stocks remains bearish. Defensive sectors, gold, and cash should dominate holdings. Intraday, short opportunities can be explored. Gold positions should be wary of the Fed's interest rate meeting on May 6. If a rate cut materializes, short-term selling pressure may intensify.
Yesterday's Review
Market: Opened higher but closed lower again.
S&P 500: Closed down 0.17%.
$NASDAQ Composite Index(.IXIC.US): Closed down 0.05%.
Philadelphia Semiconductor Index: Closed up 0.47%.
$Dow Jones Industrial Average(.DJI.US): Closed down 0.38%.
Volatility Index: Closed down 2.49%.
Similar to the day before, U.S. stocks opened higher but closed lower again, with the difference being that they closed higher the previous day but directly lower yesterday. During the session, there were two significant drops around 10 AM and 1 PM EST.
As noted in yesterday's analysis, the S&P 500 faced resistance and was expected to pull back in the short term, which has now materialized.
Beyond intraday movements, at 5:25 PM EST, the U.S. government notified $NVIDIA(NVDA.US) that H20 chip exports would require a license. NVIDIA and AMD plunged after-hours, with the Nasdaq dropping 1.3% within half an hour.
Referencing the $Invesco QQQ Trust(QQQ.US), the overnight price slightly breached the $456 support level, with the 50MA and 200MA forming a death cross the day before. Focus today will be on whether it can rebound to previous support and hold. If the breakdown is confirmed, stronger downward pressure may follow.
U.S.-listed Chinese stocks: Opened lower and closed lower, but losses were limited.
The Golden Dragon Index opened down 0.3% but showed better resilience than the broader U.S. market, closing down 0.49%. E-commerce stocks stood out, with Yatsen Holding gaining 13.32% against the trend.
The stock's trading volume did not improve significantly yesterday, but its price surged sharply. With the 20MA and 30MA nearing a death cross, strong selling pressure may emerge. Caution is advised for long positions.
Magnificent Seven: NVIDIA went from leading gains to leading losses.
Last night, most of the Magnificent Seven declined except for NVIDIA and Tesla, but after-hours and overnight, all fell due to news, with NVIDIA leading the drop at 6.45%, followed by Tesla and Meta at around 2%.
The U.S. export restrictions on NVIDIA's H20 chips are a continuation of the U.S.-China "chip war" and may extend to AMD, Intel, and others, triggering sector-wide declines. NVIDIA's $5.5 billion provision stems from inventory valuation adjustments, raw material procurement contract breaches, and risk reserves for future policy uncertainty. This amount represents about 7.5% of its 2024 expected net profit of $73 billion, roughly matching the 6% after-hours drop.
For China, the H20 chip accounts for 85% of NVIDIA's $17 billion revenue in the region, so the policy impact will significantly affect its Chinese business. Long-term, a balanced view is needed: On one hand, U.S. chip containment policies are long-term, accelerating China's self-reliant supply chain; on the other, U.S. firms may lobby the government or adjust supply chains to find new equilibrium.
U.S. sectors: Entertainment led gains.
Sector-wise, the market dipped slightly but with mild volatility. The T0-tier entertainment sector led with a 2.73% gain, with $Netflix(NFLX.US) up 4.83% and iQiyi up 6.71%.
Commodities and currencies (as of writing): Gold remains strong.
WTI crude oil main chain: Down 0.33%.
Gold: Up 1.46%.
Silver: Up 0.10%.
Copper: Down 0.85%.
U.S. Dollar Index: Down 0.37%.
U.S. Treasuries: Rebounded noticeably.
US2Y: Yield down 0.54%.
US5Y: Yield down 0.88%.
US10Y: Yield down 0.36%.
U.S. Treasuries rebounded sharply yesterday, diverging from the dollar's decline. Downside risks warrant caution.
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