April fifth, two thousand twenty-six (260330-260405)
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Attention! Many lines of reasoning have been covered once and will not be repeated!!! Be sure to review previous weekly Wraps on your own!!! This is essential!
In the new weekly publication, we have made the following changes:
1) We have reordered major assets according to stronger logical connections and explained more clearly how their movements corroborate one another, providing readers with a comprehensive picture for finding anchors across asset classes... The process of seeking certainty is essentially the process of finding an anchor for pricing...; 2) We have strengthened the detailed analysis of the current week's developments, laying the groundwork for expectations over longer horizons. Alongside serving portfolio allocation, this also offers readers some reference for their medium- and short-term actions... After all, every long-term decision is merely a series of rolling short-term decisions...; 3) We have reduced coverage of noisy asset classes. Positions that have already been exited, and assets whose fundamentals have not changed much (consistent with what we said the previous week),will no longer be continuously updated in the weekly publication or take up too much space. Instead, we will add assets that are urgently in need of observation and entry... After all, what matters for actual decision-making is what is happening now and what lies ahead. On this point, we ask everyone to cooperate by reviewing the historical material on your own; we will not give everyone a history lesson every week... But reviewing it is necessary and absolutely must not be skipped. Before reading, please also read the community updates for the current week or the relevant historical trading days. 4) The content will gradually incorporate our own understanding of the world of investing and trading, and systematically explain our ideas and principles. These are the views of one firm; they are intended to spark further discussion and are for reference only. Please be understanding of any shortcomings.
Starting 251109, the weekly publication has been fully revamped. For the historical framework and content, see “WEEKLY WRAP 251026” and earlier material.
Starting 260322, the weekly publication has been updated again. Its content is divided into four major categories—equities, bonds, foreign exchange, and commodities—to lay out the key narrative.
I. Global equity indices and a discussion of going long again
The market is looking to participate in a rebound and with Unwilling to participate in weekend risk swinging back and forth between them, price action during this period—whether daily or weekly closes—means little, or rather, price itself is much more important than structure:
Chart:Sell and hedge before the weekend, then rebound on Monday This trading pattern has become the norm
Global Fundamental L/S managers recorded their largest monthly drawdown since 22 year 1 month in March. Global equities have been net sold for the fourth consecutive month, at the fastest pace in thirteen years. The market is de-risking while retaining a large number of shorts that will be forced to cover in a rebound:
Chart: Huge scale of net selling
Chart: Technical potential for a risk reversal
From the data perspective, short covering exceeded long selling over the past week while positioning also recovered somewhat at quarter-end:
Chart: SPX Non-Dealer 1 Week Futures Flows
Global institutions’ CTA positioning is close to an extreme-short threshold, Any price rise prompted by an unexpected positive event (price itself is much more important than structure) would trigger rebound buying in US and global equities Against this backdrop, shorting is actually very risky. If you are still holding positions, you must set strict, staggered profit-taking levels:
Chart: Expected Flows in Different Scenarios by Markets
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The reason for starting an active discussion of long positions in this weekend edition, with oil prices at new highs,(It is actually counterintuitive, I know; but discussion should precede price)is largely this USDINR trade that was closed out:
Chart: USDINR (daily chart, as of 260405)
Those who have followed the weekend column closely will remember this instrument. It is a good proxy trade for a global growth shock; since exiting in 3.31, it has continued to decline to this day, This reflects the market beginning to price out the US-Iran crisis.
Chart: SPX (daily chart, as of 260405)
Leverage funds began covering starting on the 4 month, 1 day, At present, our index short positions on the 240H and 1D time frames have both been closed for profit. For now, a break below 6475 would trigger a renewed short, given that the market is still trading below the annual moving average.
The 200-day and 50-day moving averages are extremely important here. A move back above the 200-day moving average would allow the market to begin internally rotating into longs under micro-level leadership, and market participants could re-enter to establish long swing positions. A move back above the 50-day moving average would mean the bulls had retaken control of the broader picture; the corresponding fundamental pricing in this scenario is the so-called soft-landing path.
Chart:Oil price shocks do not mechanically determine the direction of the stock market; EPS revisions are the variable that determines most of the reaction.
Chart: EPS Growth During 12 Months after Oil Supply Shocks
Specifically, Q1 forecast EPS growth's 87% all come from technology, and half of full-year US EPS growth depends on technology.AI investment is currently the main source of earnings support for bulls in global markets.In fact, technology stocks are the real “fundamental stocks” right now: either a batch of results that fall short of expectations will drive global markets lower still, or a batch of decent results will pull global indexes back above the 200-day moving average (back near the 50-day moving average)Of course, the sector that drives the move is naturally the main focus of trading. This means that technology will lead the rebound theme in any market (if a rebound does materialize).
Chart: Mega-Cap Tech’s advantage over Non-Profitable Tech has already been substantially given back
At this point, several outcomes are relatively clear:
1) A move back above the 200-day moving average would be a buying opportunity, with technology stocks as the main focus
2) Trade the bottom-up divergence rather than using the index itself as a proxy (the index itself will be capped by the 50-day moving average)
Within technology and the main market themes, the focus is bound to shift from broad risk appetite to distinguishing earnings quality and cash flow, You could also say that what the market is rekindling is not genuine risk appetite; against the US-Israel backdrop, there will not be a truly rapid rekindling of risk appetite. This is a selective attempt to take long positions—for us, and for most institutions.
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If we must consider indexes (although, relatively speaking, this is not appropriate), there are two markets worth focusing on:
1) The Japanese market
Chart: Nikkei futures (daily chart, as of 260405)
Note: The daily-level signal has turned bullish; Stop is at the D/Stop on the right.
2) The Hong Kong stock market
Chart: Hang Seng Tech (daily chart, as of 260405) (orange is the 50-day moving average; blue is the 200-day moving average)
Note: The current planning point for a bullish turn on the daily time frame is at 4835
The basis for betting on the Japanese market comes from the foreign exchange market, while for Hong Kong stocks it comes from their relative positioning.
However, given that a growth shock is taking shape, and equity markets ultimately discount expectations for the future, the market is still being too slow to price in the growth impact and has yet to complete a more thorough repricing of growth, Without confirmation in the same direction from data across all three levels, any long position should be sized at only 0.25～0.5x of a standard position.
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Chart: US Dollar Index (four-hour chart, as of 260405)
For the US Dollar Index, both of last week's expectations played out as anticipated: 1) a new Higher High, and 2) a pullback to the red line followed by a move higher. The market has now validated our long position at red-line support for the third time. Note that this line was drawn before the first circle was marked, We did not get this line by connecting recent lows; the line came first, and the recent lows came afterward.
The key thing to watch here is whether the US Dollar Index can make a decisive breakout next week, in what would be its third attempt to move higher.
... If this attempt fails again, a break below the red line will become the base case, and the index will fluctuate around 98.8.
... If the path of a break below the red line plays out, suppressed Asian equities will get a respite lasting 1-2 weeks.
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Note, SEK continues to fall, while WTI continues to rise,
SEK is the asset we have been closely watching as a target for a reversal when the rise in oil prices ends:
Chart: SEK overlaid with WTI (daily chart, as of 260405)
Second, some further micro-level details as the Iran shock enters its second phase
In addition to the bottom-up approach in the technology sector discussed above, metals will not completely fade from view in this phase either(although copper, as a core proxy for global growth, may remain under pressure until the market finally confirms just how severe the so-called growth shock is):
Chart: Shanghai copper (daily chart, as of 260405)
Shanghai copper remains capped below the green and yellow lines, although it has shifted from a downtrend into a quiet, trendless state (lasting 6 trading days).You can set the yellow-line price as a key alert level.
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Still related to the technology supply chain, global WF6 is facing an urgent supply risk:
Chart: WF6 shortage
Chart: Related proxy 1 (daily chart, as of 260405)
Chart: Related proxy 2 (daily chart, as of 260405)
The news is just an outcome; the broad repricing of resource stocks is essentially tied to the hard-asset theme, a point we explained in detail in Notes 260316, “From Hormuz to Growth Damage: The Market Is Slowly Realizing This Is More Than Just an Oil-Price Shock.” If you missed it, you can go back and read the piece:
Chart: Notes 260316, “From Hormuz to Growth Damage: The Market Is Slowly Realizing This Is More Than Just an Oil-Price Shock”
Chart: Although resource stocks are most sensitive to supply shocks and repricing, mining stocks have in fact still outperformed the S&P over the past two weeks
In the early stages after the event fades, materials, industrials, and consumer discretionary—areas that had previously been more heavily discounted due to uncertainty—are more likely to recover first. Later on, the market will again favor sectors with greater fundamental certainty, including but not limited to rate-sensitive equities, AI dip, and the next layer of materials and components for Asia AI infra, The likelihood of all cyclical sectors rising together is not high.
Chart: European heavy-asset proxies continue to outperform light-asset proxies
The hard-asset theme also has a name on Wall Street today: The HALO Thematic, namely Heavy Asset, Light Obsolescence，The essence of this concept is to seek a place of reassurance in a future human society marked by profound uncertainty. In the face of war and the impact of artificial intelligence, what kinds of businesses have a moat? What kinds of assets are sustainable?
Whether in the markets or in one's own life choices, everyone has to answer this question.
III. Aluminum and magnesium: how to deliver to the market and how to arbitrage the spread
We had been emphasizing aluminum's fundamentals on the Star a week ahead of the market. We made two trades in this round of shock-driven trading. The first was aluminum:We built up our core position at low levels, then sold at the highs after the news and prices came out; the second was after selling, switching to short-term arbitrage in magnesium as a substitute for aluminum(most arbitrage windows will close within 1-2 trading days),A review of these two trades：
Chart: How we traded this aluminum fundamentals shock
Chart:View note
Stable correlation is a prerequisite for spread-trading arbitrage Of course, it is also possible that the market does not recognize (or has not noticed) this correlation. If that happens, just switch to something else.
Chart: Stable correlation between magnesium proxies and aluminum proxies
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Chart: Shanghai aluminum (daily chart, as of 260405)
Shanghai aluminum pulled back after a sharp rise but, as of 1), remained above the 50-day moving average; on the 2) daily timeframe, it remains in a bullish state.
IV. Oil, gold, silver, uranium, and the yellow metal
The discussion about oil is starting to shift toward the physical market.As of today, Asia ex-China refined product stocks have about a month remaining, while Europe has about fifty days. Naphtha and LPG inventories are especially low, and several countries are highly dependent on supplies from the Gulf, with the dependency ratios for South Korea and Singapore close to three-quarters. The March shortfall has not yet spiraled completely out of control, largely thanks to old stocks, substitute imports, and export restrictions, but the buffer is being depleted.This chain will extend from crude oil to a broader range of industrial raw materials, with the impact spreading beyond oil prices themselves to semiconductors, aviation, plastics, agriculture, and medical equipment, To sum it up in one sentence:last tankers that crossed Hormuz pre-war are arriving, new deliveries are not happening.
Chart: It is to be expected that the news will shift toward the real-world impact on physical supplies
This helps explain why North American energy stocks performed so poorly even during a week when crude oil surged. S&P; Energy fell 5.6% for the week, underperforming the S&P by about 872bp; US LNG had the biggest declines, while NAM Midstream had the smallest. WTI rose about 12.3% over the same period, 3-2-1 crack fell about 5.3%, and Henry Hub fell about 9.7%.The market is distinguishing—and has already begun to distinguish—who will actually benefit. Simply mapping oil prices onto the entire sector is no longer precise enough.
Chart: Breakdown by product
Chart: Divergence within energy stocks
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Chart: Brent (daily chart, as of 260405), in a daily flat position
Chart: WTI (daily chart, as of 260405)
Note: The reference stop-loss price for the daily bullish position is around 96.5
Chart: CMX gold (daily chart, as of 260405)
Note: See the small panel on the right for status at each timeframe. Since 240H turned bearish, 1D has continued to hold a bullish position;After precise support on the 200 daily chart, leveraged funds turned bullish again from 4 month 1.
Chart: CMX silver (daily chart, as of 260405)
In fact, leveraged funds turned bullish in silver alongside gold on 4 month 1, although you probably cannot tell by looking at the price chart But that is indeed the case. Its daily timeframe has already been bearish for 23 trading days. To turn bullish, the price needs to rise above 80.34; for the 240H timeframe to turn bullish, the price must also rise above 76.The biggest mistake is to predict and jump the gun.。
Chart: URA (daily chart, as of 260405)
As planned last week, uranium turned bullish as expected (note that the trend status is still counter-trend, and the weekly timeframe remains bearish, This is an early entry, so only a standard position size of 0.25-0.5x can be used), and the current daily stop-loss level is above 45.
Chart: Xiao Huang (daily chart, as of 260405)
Xiao Huang is moving erratically within the range we marked out earlier, Do not make any moves until something meaningful happens.
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Five, China market
A bespoke column for a group of overseas institutions has also been published on Xingqiu; see (https://t.zsxq.com/gnwOc）这条，总的来说，四月初的核心问题在于，中东局势冲击究竟是改变了中国股市的运行逻辑，还是仅仅造成了短期扰动。The latter is clearly the more reasonable interpretation.
The current market trend is clearly directly affected by oil prices, geopolitical headlines, and the repricing of global inflation and risk appetite. But beneath this shock, the dominant forces in the domestic market have not shifted toward indiscriminately defensive sectors (this is extremely important)Instead, structural rotation is underway toward technology and hard-tech subsectors where policy support, industrial momentum, and earnings visibility converge.
This judgment is crucial because April is the key moment when the market narrative must be put to the test. The market must now assess whether the strong macro data, export resilience, recovery in producer prices, and active inventory restocking signals seen in January and February this year can withstand the external energy shock.
At the same time, as earnings season gets underway, the market needs to distinguish between two types of sectors: long-term narrative-driven sectors that still rely on valuation upside, and areas that stand to benefit in real terms, where orders, capital expenditure, and commercial conversion are already visible.
Therefore, the core mechanism has a dual structure.The surface-level mechanism is that rising oil prices increase the likelihood of stagflation fears taking hold in developed markets, complicate the interest-rate outlook, and put pressure on global risk assets. For China, the more important question is whether external tightening pressure is sufficient to suppress the domestic economic stabilization process. Current signs point to weaker index performance, narrowing market breadth, and more cautious risk appetite, but the underlying trend of industrial rotation has not been interrupted.
A more strategically significant view is that China is currently being assessed through the lens of industrial cycles, rather than solely from the perspective of short-term inventory cycles. Every major leading phase in modern China has been shaped by policy-driven industrial cycles. From this perspective, semiconductors, artificial intelligence, high-end equipment, aerospace, innovative drugs, and the low-altitude economy supply chain are not fleeting themes, but a potential group of leading industries under the current system. Geopolitics may disrupt the surface picture, but may not necessarily shake this deeper structure.
For the market, this This is not a signal that everything is bullish, but rather one of structural divergence. Weakness at the index level may persist, the energy sector may remain firm, and duration strategies can still provide a defensive cushion. But within China’s equity market, capital has drawn a clear line between two types of sectors: those benefiting only from swings in market sentiment, and those that remain well positioned amid policy direction, the pace of industry rotation, and the next round of earnings-based selection.
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If the sectors currently showing relative resilience can translate policy support and industry narratives into clearer visibility on core revenue, margins, or capital expenditure, this round of structural rotation can continue even in a difficult macro environment. Otherwise, the market may revert to a more indiscriminate valuation pullback. So, rather than forecasting the specific course of the conflict in the Middle East, the key over the coming weeks should be to track confirmation: the market has entered a phase in which it must prove that pricing is shifting from narratives to actual execution.
Six, Some other charts I’m watching
1/ NY Harbor ULSD, on the daily chart it has resumed its uptrend near the highs; 240 H has turned bullish 6 bars
Chart: NY Harbor ULSD (daily chart, as of 260405)
2/ RBOB Gasoline has likewise resumed its uptrend near the highs.
Chart: RBOB Gasoline (daily chart, as of 260405)
3/ Bloomberg Commodity Index Futures overlaid with GC, An exceptionally rare spread move
Chart: Bloomberg Commodity Index Futures overlaid with GC (daily chart, as of 260405)
3/ Oil Shock in the 80s vs. today
Chart: Focus on Private Credit
4/ U.S. Aerospace & Defense ETF reached the estimated target level and found support here before rebounding
Chart: Aerospace & Defense ETF (daily chart, as of 260405)
5/ India’s Nifty 50 Index: A break above the yellow line would end the decline.
Chart: NIFTY (daily chart, as of 260405)
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(End of article)
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Note: All content herein is for reference only, does not constitute investment advice, and is not a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on such information as a basis for their decisions.