Forwarded from: Xingzhi US Stocks

A Day of Ups and Downs…

“NVIDIA's market value evaporated by $589 billion, setting a record for the largest loss in market history”... In fact, $NVIDIA(NVDA.US) closed below the 200-day moving average today, marking the first time in nearly two years.

Why did the market experience such significant volatility and reaction today?

For days like today, there is often no single answer, but it seems to be a mix of the following factors: profit-taking by bulls on popular stocks (looking back about two months, some AI and infrastructure-related stocks are still close to flat), a lack of “defensiveness” (understandable given the speed of market fluctuations), technical factors (such as ETF trading volume, momentum pullbacks, options activity, retail trading, etc.), and the macroeconomic backdrop (such as the movement of the dollar or the 10-year Treasury yield approaching 4.4%).

As for “how long this situation will last,” it is indeed a difficult question to answer (perhaps depending on some unpredictable developments in AI market sentiment going forward). But it is worth noting:

1. Our **TMT Momentum Pair fell about 9.3% today, one of the largest pullbacks in the past 10 years (similar events include Vaccine Day in November 2020 and the unexpected CPI data release in November 2022);

2. Some stocks did rebound in after-hours trading (yes, NVDA, $Vertiv(VRT.US) , $Broadcom(AVGO.US) , $Credo Tech(CRDO.US) , $Oracle(ORCL.US) all rose more than 2% in after-hours trading)

3. From the background of these fluctuations, stocks like $GE Vernova LLC(GEV.US), $Vistra(VST.US), $Taiwan Semiconductor(TSM.US), and ORCL are still close to flat this year (and many AI stocks remain above the 100-day moving average).

In a situation where information, feedback, and actions are still constantly changing, here are some key points from our discussion today:

1. Does this really change our structural view from a week ago, such as our perspective on the power/silicon/manufacturing sectors? Or is this merely a "risk aversion"/position adjustment/valuation event (like the unexpected performance on Monday morning before earnings week)?

2. Is the performance of the software sector today "reasonable"? (From the data, this is the largest single-day divergence of the software sector relative to the semiconductor sector in over 20 years). If it is reasonable, is today's volatility the result of "real" capital flows, or just a byproduct of a momentum liquidation wave? In any case, this week listen to $Microsoft(MSFT.US),$ServiceNow(NOW.US),$SAP AG-Sponsored(SAP.US)**, The earnings reports of companies such as$Atlassian(TEAM.US)and$Dynatrace(DT.US)present a good opportunity.

3. Non-AI stocks — It has been a long time since about 70% of the stocks in the S&P 500 rose in a single trading day, but today feels like that (the pressure is clearly concentrated on AI-related stocks).

This has sparked a recent topic: Looking for stories with "thematic clarity" (such as fields not caught in the AI vortex or tariff vortex). As enthusiasm for thematic investing continues to rise, is it worth re-examining those non-thematic companies? For example, targets like AT&T, Visa, and LYV.

1. Divergence among FAAMG stocks — $Apple(AAPL.US) rose 3% (this is one of the top three single-day performances relative to NDX in the past 10 years) > $Meta Platforms(META.US) rose 2% > $Amazon(AMZN.US) remained flat > $Microsoft(MSFT.US) fell 2% > $Alphabet - C(GOOG.US) fell 4% Will this differentiation be validated in the corporate earnings reports and management comments in the next two weeks? There is still ongoing discussion about "bogeys" and "whispers" in today's context.

2. TMT Earnings Reports - Tomorrow's earnings reports in the TMT sector are relatively light (SAP, FFIV, QRVO), while major companies MSFT, META, and TSLA will report on Wednesday evening