May thirty-first, two thousand twenty-six (260525-260531)
Author: Ariston
X: @Ariston_Macro
WeChat: AristonMacro (when adding me, please note your institution and name, requests without a note will not be approved）
Custom models via direct message (currently available only for daily models of the Chinese and U.S. stock markets plus a basket of crypto assets)
Note: All content in this community is shared for reference only. Recipients are not considered our clients by virtue of reading its content, nor does it constitute an invitation to anyone to sell or buy securities or other investment products, much less a basis for trading.Markets involve risks; invest with caution.All information and views in this community do not constitute investment advice;past performance is not indicative of future results. Investors should carefully assess their own risk tolerance, make independent decisions, and assume full responsibility themselves.Under no circumstances will we be liable for any losses arising from the use of content in this community. The relevant data may be delayed or inaccurate, and we accept no legal liability for the completeness or accuracy of the information.
I. The Wall Street Fool: Bulls and bears can both make money; only those who cannot sit still cannot
Image: Notes260529, “Reminiscences of a Stock Operator”
There are times when the market calls for action, and times when it does not; many losses come not from failing to understand the market, but from being unable to resist the urge to trade. No one can have a good reason to buy or sell stocks every day, and no one can always have enough information to make every trade a wise one.
Image: Notes260529, “Reminiscences of a Stock Operator”
What is it that really makes people big money?
It was always my sitting.
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In the market, bulls and bears, good and bad, can all have their golden moments. Only those who cannot sit still do not.If you do not have a clear understanding of what you are doing, it is hard to truly sit still.
Compared with clear-cut gains or losses, every trade made when you do not know what you are doing is no different from gambling.People who suffer keep paying the costs of trading in and out of consolidation zones and taking the wrong actions, then leave before the corresponding rewards arrive. In the end, they keep taking turns bearing all kinds of risks without receiving the returns they expected.
Image: Questions and Answers from Hong Kong Dragon (https://www.meridianresearch.app/home?product=asia-strategies）
I don't know whether I'm gambling, but I am gambling.
Figure: Just do your best
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II. Following up on MLCC
Figure: Notes260425 “They are true bulls; we're just ‘speculators’”
Section Six: “Price Increases for MCLL and Other Passive Components”
Notes is where we cover the fundamental one-third of our three-system framework. Friends, you should read it. First, read for the logic rather than the content: logic is transferable, while content is fixed. Understand the analytical logic, and then you can do your own analysis. If you only look at the content, you still won't be able to truly rely on yourself. Second, read it critically. I can be wrong, too. And if you read my work without then delving further and thinking for yourself, you still won't know what you're doing. When you don't know what you're doing, you can't hold on to your position and you feel uneasy. Essentially, you're still gambling—and you're betting your own money on someone else. That's no good. You can't sit well, much less make decisions about entering and exiting with a sound basis.
The day Notes was posted marked the substantive starting point for this round of gains in the MLCC basket.Here we are also sharing how to make well-grounded decisions about entering and exiting at the tail end of the trend.Making well-grounded decisions about entering and exiting means not only getting the call right, but also acting on it correctly.Not a recommendation to buy or sell securities. Make your own decisions and assume responsibility for your own gains and losses.：
Figure: Basket constituents (daily charts, as of 260531); +100% since Notes was published; move the take-profit stop to the blue dot
Figure: Basket constituents (daily charts, as of 260531); +150% since Notes was published; move the take-profit stop to the blue dot
Figure: Basket constituents (daily charts, as of 260531); +110% since Notes was published; move the take-profit stop to the blue dot
AI The trend of servers themselves using more high-capacitance components remains unchanged, as does the trend of leading Japanese and Korean companies continuing to shift capacity toward higher-value-added products (which will further squeeze the effective supply of commodity products). Materials segments such as release films, ceramic powders, and nickel powders will continue to benefit from high-end upgrading and price increases, while Chinese manufacturers will also continue to find it easier to gain share amid the push for supply-chain security.
Figure: Basket constituents (daily charts, as of 260531); +60% since Notes was published; move the take-profit stop to the blue dot
Figure: Basket constituents (daily charts, as of 260531); +50% since Notes was published; move the take-profit stop to the blue dot
Sinocera has produced the basket's first micro-level Failed Breakout, The first Failed Breakout after a sharp revaluation-driven rise is an early sign of disagreement among investors，MLCC The value chain's average 27E PE has risen from 28x in 26year 2month to 59x currently, while PEG has risen from 1.4x to 2.4x.
The strength of the benefits varies, and subsequent pricing will vary as well. Sanhuan and Jiemi benefit from price increases, market-share gains, and operating leverage; Guoci from rising volumes of high-end powders; and Boqian from high-end nickel powders and copper powders for photovoltaics.The market has already priced in more of the expected rise in nickel powder, copper powder, and metal prices, but has not fully priced in expectations for the broader, synchronized thesis extending from MLCC materials to the high-end semiconductor manufacturing equipment chain.
At this point, the sector as a whole has largely completed a significant round of revaluation. Going forward, excess returns will depend more on company-specific delivery of price increases, market-share gains, and ramp-up of new businesses. The sector cannot simply be viewed through the lens of industry Beta, and the emergence of divergence within the sector is the basic expectation.
III. Technology (sitting well) (the Korean index and the U.S. market)
To reiterate a point Planet has made repeatedly: over the past while, being long tech has been the same as being long fundamentals.But the problem with these fundamentals is also quite clear; to elaborate, the explosive growth in tech companies’ earnings has largely come from hyperscalers shifting future profits forward through capital spending to semiconductor and AI infrastructure companies. If enterprise AI use cannot truly turn the productivity gains the market expects into broad-based profit growth, this earnings impulse will be difficult to sustain over the long term.
1/ SOXX, the take-profit level has moved from 515 in last week’s weekly update to around 525. Just stay put until the price itself says to stop.
Chart: SOXX (daily chart, as of 260531)
2/ KOSPI: after the first exit discussed last week, this is the second newly opened position. After moving back above the bull-bear turning point, the price pushed higher. The stop-loss level near 7200 at entry in last week’s weekly update has been moved to a take-profit level near 7850. Be sure to apply SO filtering.
Chart: KOSPI (daily chart, as of 260531)
3/ AMD, the take-profit level has moved from 430 in last week’s weekly update to around 486. Just stay put until the price itself says to stop.
Chart: AMD (daily chart, as of 260531)
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Chart: Scatterplot of sector rotation in the U.S. equity market (as of 260531)
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A few other instruments:
Chart: CDNS (as of 260531), Stop above 358
Chart: SGC (as of 260531), Stop above 11.6
Chart: CRUS (as of 260531), Stop above 166.6
Chart: HPQ (as of 260531), Stop above 24.55
Chart: MDB (as of 260531), Stop above 294.44
Four. China market
As mentioned last week, China is in fact the only market globally that failed to move back above the bull-bear line immediately after breaking below it. To this day, it has still failed to reclaim that line.Those who kept trading erratically from the day of the breakdown may find that their account curves have not looked very good over these past two weeks.
Chart: Last week’s chart; Planet’s data dashboard after the close on 0513 showed the Shanghai and Shenzhen indices moving up in tandem and turning quiet, with clear grounds for both action and restraint.
Chart: Dashboard data (as of 260531)
Dashboard data captures market structure and contains more key information than the noisy day-to-day price fluctuations.Among one thousand fundamentally screened representative stocks in the mainland market, leverage, relative valuation, trend structure, and long/short positioning are all now in bearish territory.Before this segment reaches a turning point where the decline stalls, it is hard to speak of a genuine resumption of the uptrend.
Chart: CSI 500 (daily chart, as of 260531)
After breaking below 8695, it never climbed back above it; the rally lost momentum.The new long/short line is currently 8598.
Chart: Shanghai Composite (daily chart, as of 260531)
For the Shanghai Composite, the two red circles on the chart became the substantive low and substantive high of this rally, respectively, fully documented throughout.
The daily long/short dividing line is currently near 4113.
Chart: Shenzhen Component (daily chart, as of 260531)
Likewise, the two red circles.The long/short divide is at 15895, Note the mutual confirmation between Shanghai and Shenzhen; a reclaim by only one is a false reclaim.
Chart: Theme rotation scatterplot for the mainland market (as of 260531)
Don't trust bottoming bullish candles or reversal narratives before it emerges from lag; that's catching a falling knife. Lag is lag.
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Chart: Global fundamental funds are most underweight Chinese banks; but over the past 1 months and 3 months, funds have begun adding to Chinese banks and Korean industrials, while Indonesian banks have seen the largest reduction. While active capital chases crowded growth narratives, it is also partly replenishing underweights and rotating into cyclicals, especially sectors such as Chinese banks that have been structurally underweight for a long time.
Chart: China Construction Bank (daily chart, as of 260531), hovering near the upper edge of the purple box, with capital attempting a breakout.
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Pop Mart: an unusual development, moving into the top ranks of net southbound buying:
Chart: Pop Mart (daily chart, as of 260531), attempting to break above the red line; a breakout would signal that the decline has run its course.
Five. Foreign exchange
1/ The US Dollar Index is still holding above 98.8. The AI boom and the energy supply shock have together improved US terms of trade; combined with stronger growth, a reversal in front-end yield spreads, and capital repatriation, this has driven the dollar to a net gain of 1-1.5% since early 3. But a more reasonable framing is that, rather than indiscriminately going long DXY, a differentiated trade—long the dollar against G3 and short against some high-beta EM—is preferable.
Chart: US Dollar Index (daily chart, as of 260531)
GBPUSD; a break below may trigger a short trade.
Chart: GBPUSD (daily chart, as of 260531)
2/Relative policy and data have shifted in NZD’s favor. The RBNZ meeting turned markedly hawkish, while Australia’s CPI and employment data were weak, and expectations for RBA’s final rate hike have been pushed back. The only thing currently supporting AUD is the terms of trade boost from high oil prices. With the rate differential peaking, positioning crowded, and New Zealand more sensitive to de-escalation, the risk-reward of shorting AUD/NZD is looking increasingly attractive.
Chart: AUDNZD (daily chart, as of 260531)
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Six. Oil prices and short positioning at multi-year highs
Chart: BRN (daily chart, as of 260531)
Take BRN as an example: after breaking below the round-number level, it has now also fallen below the orange line.During the week oil prices peaked, we said on the Planet that the Strait of Hormuz would certainly reopen, but it would not return to normal overnight. Even if all security concerns were resolved immediately, it would still take several months. The first stage is for tankers already loaded to exit the Strait, clear the port, and transport the oil out, which takes about a month. The second stage is for empty tankers to return, start loading, and draw down inventories, which takes several more weeks. Only then comes the third stage: restarting upstream oil wells.
As for restarting production, high-quality assets such as those in Saudi Arabia need a month, while wells such as those in Iraq, which require a steadier flow of work, need several months. This means that falling oil prices and the normalization of energy flows will unfold more like a staircase, A V-shaped return is not the objective reality. Any trade betting on a rapid decline in energy costs in Europe or Asia needs to allow enough time.
What we really need to focus on here is where the first pivot point will form, The first pivot point will determine the slope of the subsequent oil-price trajectory, so be sure to pay attention.
Chart: BRN short positions (daily chart, as of 260531)
Short positioning in Brent futures is becoming crowded rapidly. Over the past week, managed money net sold 56 hundred million dollars’ worth of Brent, marking 4 consecutive week of net outflows. Cumulative net selling since late April has reached 109 hundred million dollars, as positioning actively accelerates toward the short side.As of now, the absolute stock of short positions has reached a historic high. In notional terms, managed money shorts in Brent this week were only slightly below their multi-year high, placing them in a typically crowded range.
Once positioning reaches this level, further downside requires significantly more new negative catalysts and additional short selling. On the one hand, longs need to start closing positions in size; on the other, term-structure shorts need to be rebuilt significantly. We have yet to see either, at least as of now.
Chart: CTA has still not turned fully bearish
Unexpected events could trigger a short squeeze, so exercise caution.
Seven. Alternative assets
Chart: Little Yellow (daily chart, as of 260531)
Little Yellow has continued to fall since breaking below 81650, the long-short line. The new long-short line here has moved above 74460.
Eight. Gold, silver, copper, and aluminum
1/ Gold is moving as expected. Those four words may be irritating, but they do need to be said. The point is not to boast about how clever I am, but to help everyone learn to recognize this for themselves. The 4595 long-short line we indicated acted as an exceptionally strong and precise resistance level over the past week, The long-short line means that meaningful active capital will cluster around this level and battle it out, so it is not easy to break through. But once it does, the pressure on gold will have been released.If you read the section on moving averages in the Planet introductory handbook carefully, then what you should be seeing now is, Bullish capital is waiting for the holding cost hidden behind the orange line to come down. It will be easier once it does; while it is too high, they cannot reach it.
Chart: CMX Gold (daily chart, as of 260531)
The candle bodies are precisely capped above by the blue line and below by the red line we marked.Wait for a breakout: go short on a downside breakout and long on an upside breakout. Just watch out for a failed breakout here; if one occurs, trade in the opposite direction.
2 / Silver, likewise, is moving as expected, with precise support at the gold line and precise resistance at the red line.。We don't have the cheek to claim we knew it all along; everything is documented throughout, so review it for yourself. Drawing lines isn't fortune-telling; getting good at drawing them takes practice. Behind the lines are funding costs, Mr. Market's emotions, and the real money on both sides of the trade. They may look easy to draw, but drawing them well is difficult.
As with gold, wait for a breakout.
Chart: CMX Silver (daily chart, as of 260531)
3 / Aluminum: the stop has moved up slightly, to above 3560. It has tried to move lower several times, but remains in bullish territory.
Although the overall fundamentals are quite contradictory, follow whichever side's territory price is in.
Chart: CMX Aluminum (daily chart, as of 260531)
Some basket proxies:
Chart: AA (daily chart, as of 260531), long stop moved below Thursday's low
Chart: CENX (daily chart, as of 260531), long stop at breakeven
Chart: Huafon (daily chart, as of 260531), long stop below the entry point
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Nine. Miscellaneous: The problem with U.S. consumption
The weekly notes from the previous two weeks discussed U.S. consumption, especially the lower half of the K-shaped economy. I won't repeat what has already been covered. What I want to add is the timing: why might the consumer fundamentals in the lower half deteriorate further after the second quarter?
Chart: Real Disposable Personal Income
April's real DPI year-over-year -1.1% supports the view that the short-term resilience in consumer spending in the first quarter was more like an illusion caused by one-off tax refunds.Unusually large U.S. spring tax refunds provided a burst of support of about 1400 hundred million U.S. dollars. As cash flow normalizes, consumption growth in 26H2 may slow noticeably Meanwhile, consumer confidence was already at a historical low in May. The U.S. economy ahead looks more likely to show divergent growth, with strong investment and weak consumption, rather than strength across the board, It is unrealistic to expect a rapid, broad rotation later on after technology stocks lose momentum; it will be hard to find the next support.
Chart: UMich Index of Consumer Sentiment
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Do your best.
(End of full text)
A quick plug: the companion U.S. equities, A/H shares, and commodities Planet channels are still being continuously refined.
A quick plug: the companion U.S. equities, A/H shares, and commodities Planet channels are still being continuously refined.
U.S. equities:https://www.meridianresearch.app/home?product=us-strategies
U.S. equities: https://www.meridianresearch.app/home?product=us-strategies
A/H shares:https://www.meridianresearch.app/home?product=asia-strategies
A/H shares: https://www.meridianresearch.app/home?product=asia-strategies
Commodities:https://www.meridianresearch.app/home?product=commodity-strategies
Commodities: https://www.meridianresearch.app/home?product=commodity-strategies
Note: All content in this document is for reference only. It does not constitute any investment advice, nor does it serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on such information as the basis for decision-making.
Note: All content shared within the Planet is for reference only. Recipients are not considered our clients by virtue of reading content in the Planet. Nor does it constitute an invitation to anyone to buy or sell securities or other investment products, or a basis for any transaction. Markets involve risks, and investing requires caution. All information and views in this Planet do not constitute investment advice. Past performance is not indicative of future results. Investors should carefully assess their own risk tolerance, make independent decisions, and bear full responsibility for those decisions. Under no circumstances shall we be liable for any losses arising from the use of content in this Planet. Relevant data may be delayed or inaccurate, and we accept no legal liability for the completeness or accuracy of the information.
Note: All content in this document is for reference only. It does not constitute any investment advice, nor does it serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on such information as the basis for decision-making.