Trump VS Powell, this single stock single-handedly crashed the Dow
Next Monday's Viewpoints and Strategies
From a technical perspective on the S&P 500, yesterday's trading volume slightly increased, with a more significant drop compared to the previous two days. The moving averages are in a bearish alignment, indicating a basically formed downward trend.
As for gold, there was a pullback yesterday, but the extent was not significant. The KDJ indicator shows overbought conditions, and the deviation rate remains high. There may be further pullbacks in the near term. Based on the current gold market trend, one could wait for the price to retest the 5-day moving average or for the 20-day moving average deviation rate to fall below 5 before considering adding positions.
The VIX trend diverged from the broader market. Amid a general market decline, $2x Long VIX Futures ETF(UVIX.US) fell 5.37%. There might be arbitrage opportunities next Monday by trading the broader market and VIX in the same direction.
Broad Market: Powell "Lands," U.S. Stocks Plunge
U.S. stocks experienced a broad decline last night, with all major indices falling to varying degrees except for a slight rise in the S&P 500. The Dow Jones Industrial Average was dragged down by UnitedHealth ($Unitedhealth(UNH.US) ), the eighth-largest by market cap, plunging 1.33%.
According to UnitedHealth's earnings report yesterday, Q1 revenue was $109.6 billion, up 9.8% year-over-year but below the expected $111.5 billion. The company also projected rising costs and significantly lowered its full-year EPS guidance to $26-26.5.
As a result, the stock price plummeted 22.38%, erasing all gains since February this year, while trading volume hit a 15-year high.
Meanwhile, the conflict between Trump and the Federal Reserve intensified. Trump called for rate cuts three times yesterday, even claiming Powell should have been fired long ago. Internal conflicts further added to the turmoil.
Chinese Stocks
The Golden Dragon Index once again opened high and closed low (another low close, running out of words), opening 2.11% higher but then continuously declining, with a volume-driven drop at the close, ending down 0.42%.
Interestingly, Sohu (SOHU) ended its 17-day losing streak yesterday, rebounding 5.31%. From a medium-to-long-term perspective, the current price has fallen to the 2023 bottom platform. However, since there are no major positive developments in fundamentals or news, position control is advised if considering a bottom-fishing strategy.
The Magnificent Seven: Collective Collapse
Last night, six of the Magnificent Seven stocks collapsed, with only $Apple(AAPL.US) showing a slight oversold rebound, rising 1.39%.
The anticipated rebound in Nvidia did not materialize; instead, it continued to decline, closing down 2.87%. However, there might be strong support around the $100 level.
U.S. Stock Sectors
Pharmaceutical manufacturing led gains, up 3.23%, while health plans led losses, down 14.13%.
The sharp decline in the health plans sector was mainly due to the UnitedHealth bomb, dragging down sector sentiment. UnitedHealth is the sector's leading stock, with a market cap over four times that of the second-largest.
Commodities and Forex
Crude oil prices surged, while gold experienced a pullback.
WTI crude oil main chain: up 2.92%
Gold: down 0.49%
Silver: down 0.66%
Copper: up 0.59%
USD Index: down 0.03%
U.S. Bonds: Continued Recovery
The escalating conflict between the Federal Reserve and Trump led to institutional selling of U.S. bonds, pushing yields higher, with long-term bonds rising more than short-term bonds.
US2Y: yield up 0.45%
US5Y: yield up 0.84%
US10Y: yield up 1.32%
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