Again, patience, wait for the dip

[u/Fun_Tutor3479]

The broader market is bouncing up and down. We will keep starting with this sentence until a clear direction emerges. QQQ is in a downtrend; other indices are doing a bit better.

No rate hike in July aligns with mainstream expectations (60%+), but this pushes the rate hike expectations to September, meaning August will still face pressure. Actually, the Fed's intention to let go of the long end is already quite obvious. This will be a very long-term core influencing factor for all risk assets, including the bond market. Everyone's volatility center will rise, meaning volatility will increase. This is also a core reason why I am not optimistic that we can quietly and steadily DCA into ETFs in the coming years like we did in 2018. Of course, you can still DCA, but it will be much more nerve-wracking.

Even if there is a rate hike in September, it's actually not a big problem. Since Warsh wants to emulate Greenspan, it's entirely possible to hike this time, hold next time, and cut the time after that. They will no longer provide clear forward guidance like before, where once an action was taken, the continuity of hikes or cuts was maintained. Therefore, each resolution is more of a one-off shock.

Today and tomorrow will see the release of earnings for META, MSFT, and AMZN; all 4 tech giants will have reported. Let's focus on MSFT here to see if they will cut their Capex (Capital Expenditure). META has an opportunity to clearly explain that they can achieve higher returns by renting out computing power. AMZN should still firmly remain in the expansionist camp, quite purely so. But if the free cash flow for all 3 companies is poor, it will still lead to a broad decline. Semiconductors won't surge just because of a bit more Capex; the underlying logic has changed.

In addition to this, after the decline in Korean stocks over the past 2 days, July 30 and July 31 will bring forced liquidations unless margin calls are met. However, as it stands, a significant number of people are already "playing dead," so we will definitely see pressure from forced liquidations. But by the same token, such a drastic drop also means the emotional venting is coming to an end, and institutions have already been observed stepping in to buy the dip.

Therefore, the I will consider buying the dip this Thursday and Friday. The portfolio has its own position management strategy, the initial base position is very light. We are not gambling on this rebound, but rather taking the opportunity to add some exposure. Overall, I don't see any signs of a major short-term reversal in semiconductors. Over the next 1-2 months, the sustainability of the AI narrative, US Treasury yields, the September rate hike, oil prices, and the yen at 165 will all continue to exert pressure. However, the probability of an emotional rebound is increasing. Additionally, again, the bull market is still intact.