• ...the “buy everything” AI phase is over...
• ...the effectiveness of indiscriminately buying tech beta is bound to decline...
• ...portfolios that can identify crowded longs and short-term momentum reversals will significantly outperform the index...
• ...a genuine downside move requires another advance and a renewed climax as its foundation...
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I. Macro Trading Positioning
Figure: Macro Drivers positioning map
Gold-rimmed dots indicate movement toward the upper right (as of 260705)
The main areas to watch here are PGM&Precious at the lower edge, Softs as the strongest relative performer across global cross-asset markets, and the consistently stable EM Fx Stress trade.
Red indicates unanimous shorts, green unanimous longs, and gray disagreement; gold-rimmed dots indicate movement toward the upper right (as of 260705)
II. Tech Trading
Figure: The tech leader, the Korea index, broke down and moved lower as expected
KOSPI (daily chart, as of 260705),The long-short positioning moved from 8831.7 in last week's weekly review to 8620.17
Drawn by Planet Goldline two weeks ago, Since we closed out our position, the Korea index has broken down as expected and continued moving lower.
See《26-06-28 Weekly Review Ari's Weekly Wrap》
Figure: A sharp reversal in tech and Asian trades
The magnitude was close to that of the March trade, and the time window was even shorter (daily chart, as of 260705),
The reversal in Asian fund flows was sharp. Net selling in 6 nearly erased the record buying spree in 5; selling was led by the Japanese market and reached a record scale, while Korea also gave back all of its YTD buying (Taiwan, China, meanwhile, still retained its significant net inflows since the start of the year);Market sentiment is still to buy the dip, but the AI buy-everything phase is over. From here, the market will selectively reward quality, execution, and company-specific delivery, while indiscriminately buying technology beta will become less effective.
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Meanwhile, US Fundamental L/S gross and net leverage are both near one-year lows. At this point, risk budgets have clearly contracted, and since institutions have already cut the leverage they can reduce in the short term to low levels, if earnings do not actually disprove the AI thesis, the marginal force with which shorts can continue to weigh on the indices will diminish. During this period, portfolios that can identify crowded longs and short-term momentum reversals will clearly outperform the indices.
Chart: De-crowding is underway
Source: GS Prime flow data. Hedge funds have been net sellers of U.S. equities for a third consecutive week, with Tech the most heavily net-sold sector for a fourth consecutive week, while flows are rotating into Cyclicals.
The imbalances that would bring the 1990 boom to an end are not yet obvious, but the risk-reward no longer supports the market extrapolating short-term trends too far.U.S. equities 2 Q earnings season begins on the 7 month 13 day. The market has become somewhat nervous after the pullback. If hyperscalers, semis, and AI infrastructure continue to deliver strong growth, current prices will mark the lower end of a high-level range; if capex or order expectations are revised down, a break below support will bring choppy trading that turns into a downtrend.
Chart: Building a range; a purple rectangle appears
SOXX (daily chart, as of 260705) has continued lower since exiting; a purple rectangle is forming, and the long and short sides should not move their price levels.
When you see a purple rectangle, you should get nervous.At SOXX, we quickly cut losses and exited our erroneous trade and since then it has made a new low for the top in 15 bars. Before Q2 comes out, it will not actually break below this rectangular range; at most, it will move back and forth near the lower boundary while waiting. Neither shorting nor going long here is worthwhile, so we should quietly wait for the market to confirm.
Chart: The structure of the U.S. dollar index is clearer
SPX (daily chart, as of 260705)
Compared with SOXX and KOSPI, which serve as core technology proxies, the structure of SPX is actually less noisy.Since we took profits on our index longs at 6.3, it has not once broken above this key level separating the bullish and bearish sides and, likewise, a purple rectangle is forming. The outcome will be confirmed at Q2.
Subjectively, to be honest, an upward path is more likely and more in line with my expectations... Note that this is being said from a bearish perspective. A genuine decline needs to be built on another upward move culminating in a climax.
The biggest risk to the AI trade is capex. Other factors—government regulation, token maxxing, and so on—are unlikely to cause a material shock (meaning a shock severe enough to make a group of AI micro-level assets break down sharply).
As long as capex continues, even if the upside in memory or semiconductor equipment stocks currently being traded is limited, capital can seek out second-derivative spillover chains to keep trading—for example, industrial infrastructure, power, and robotics. But in any case, capex must hold steady.
Chart: Some other charts
SK Hynix (daily chart, as of 260705) has continued lower ever since profits were taken.
SK Hynix has continued lower ever since we took profits and exited.
STAR 50 (daily chart, as of 260705): Taking profits
STAR 50 has broken below our take-profit level. Long/short prices are currently positioned above 2153.
III. Global Equities & Political Risk in Southern Europe
Chart: Positioning map
Red indicates unanimous shorts, green unanimous longs, and gray disagreement; gold-rimmed dots indicate movement toward the upper right (as of 260705)
Performance rankings over the past week
The pressure on risk assets from oil prices and the Middle East shock continues to ease. Markets have moved from their most stressed state back into a manageable range, which should continue to help reduce input-cost risks and support a number of specific risky assets; trading details for this segment are covered in“Europe: A Group Facing Breakouts Above the Upper Bound” &“Volatile Latin American and Middle Eastern Markets”At present, a number of proxies have broken above the upper bound.
What needs updating is Southern Europe, represented by Greece, Spain, and Italy.Political risks in Southern Europe are rising. Italy, Spain, and Greece will all enter election windows in 2027, and the common risk across the three countries is that, following the relatively stable governments of the previous cycle, the next elections may produce split parliaments / hung parliaments, making government formation and policy implementation more difficult.
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On the timeline, Spanish and Greek elections must be held by the end of 2027 7 at the latest, and are more likely to be held before 2027 4; Italy’s election must be held by the end of 2027 9 at the latest, and could also be brought forward to 2027 4, although that is unlikely.
The key variable in Italy is whether the opposition can run as a united front, rather than the details of any single electoral-system provision. The current system combines 1/3 first-past-the-post with 2/3 party-list proportional representation, with majoritarian corrections through coalition 10% and single-party 3% thresholds. The government is considering introducing a majority premium for the coalition that wins the most votes and receives total support of 42%; related discussions began in parliament on 7 14. Whether or not the reform passes, the system still incentivizes broad coalitions, and coalition-building is the variable that truly determines stability. The Italian opposition theoretically has a chance of winning, but policy differences mean the risk of a hung parliament remains high. In the 2022 election, the current opposition parties ran in three separate coalitions, reducing their chances of victory; had they run together, their vote share might have exceeded that of the incumbent centre-right coalition. In the latest polls, the broad centre-left opposition, comprising PD, 5 Star, Italia Viva, and others, leads the ruling coalition by around 5 percentage points. But this lead is electoral arithmetic, not a guarantee of a stable government. The opposition coalition’s policy agenda is complex and marked by numerous conflicts. Going forward, markets should watch whether a united run actually takes place and whether the coalition would be governable if it does.
Chart: Southern European equities above the key gold line (1)
Italy (daily chart, as of 260705)
Spain is already governed by a minority government, and the risk is that regional parties will continue to hold the key to government formation. In the 2023 election, PP won but failed to form a government. Sanchez formed a PSOE minority government after winning a confidence vote through agreements with regional parties. Since then, the government has struggled to pass major legislation and has also failed to approve an annual budget since 2023. Spain’s 52 constituencies and the high effective thresholds in small provinces give its proportional representation system a pronounced corrective effect. PP and Vox currently appear poised to win a parliamentary majority in the next election, but support for regional parties remains stable, and they could once again push the result toward a hung parliament. Judicial investigations in Spain are currently weakening support for the Sanchez government, but the impact remains manageable. Investigations into corruption allegations have slightly widened PP’s lead over PSOE, but the report emphasizes that the impact on government approval is limited for now. From a trading perspective, investigation headlines alone are not enough to trigger a repricing of Spanish political risk. The key questions are whether the investigations further reduce PSOE’s support, whether PP+Vox can hold onto a majority, and whether regional parties again become decisive. Until these conditions are confirmed, there is insufficient evidence to bet on a widening of Bonos spreads based solely on the investigations.
Chart: Southern European equities above the key gold line (2)
Spain (daily chart, as of 260705)
In Greece, institutional risk is concentrated in whether New Democracy can secure a sufficiently large majority premium. Greece uses reinforced proportionality: the winning party receives 20 additional seats if it wins at least 25% of the national vote; for every 0.5 percentage points above 25%, it gains 1 more seats, up to a maximum of 50 additional seats when its vote share reaches 40%. Only parties receiving at least 3% of the national vote enter parliament.
In 2023, Mitsotakis’s ND won more than 40% of the vote and secured an absolute majority. But since 2024 6, polling has fallen to around 30%. It still leads Pasok and ELAS, newly formed by Tsipras, but current polls suggest it is more likely to need a coalition government.
The most likely post-election combination in Greece is ND and Pasok, but campaign rhetoric will understate the realities of government formation. All major parties tend to deny the need for a coalition before an election; this is normal campaign strategy. If ND remains at around 30% and cannot move back toward the 40% majority-premium ceiling, reassessment of a coalition government after the election will become the baseline scenario. For markets, the risk in Greece is that a shift from a single-party absolute majority to coalition government will reduce the premium for policy stability.
Chart: Southern European equities above the key gold line (3)
Greece (daily chart, as of 260705)
However, Given that economic activity remains resilient, the fiscal path remains controlled, and sovereign spreads have largely retraced the widening since the Iran war, political risk through year-end looks more like a tail risk to monitor than the main story for Southern Europe right now. It therefore does not yet affect the ongoing trade, but friends should continue to keep this tail risk in mind.
Chart: Resilient Southern European growth and retracement in spreads
Activity momentum remains strong in Greece, Spain, and Italy. The pressure on sovereign spreads since the Iran war has stemmed more from external shocks and core rates, with no sign yet of Southern European political risk developing independently.
Four. U.S. Equity Market
Chart: Positioning map
Red indicates unanimous shorts, green unanimous longs, and gray disagreement; gold-rimmed dots indicate movement toward the upper right (as of 260705)
Performance rankings over the past week
Consistent with the view shared on the Planet two weeks ago, against the backdrop of a trading bottleneck in AI, capital is attempting to rotate aggressively to support current large-cap price levels.A break below the purple rectangle would be bad for everyone. Those who have closed positions also hope that profitable money will continue to compound in the market; people who have made money rarely switch immediately from greed to caution. The rotation driven by greed is itself a form of momentum behavior that traditional momentum factors do not capture.
The main areas drawing rotation at present are aerospace, software, crypto, financials and insurance, the healthcare basket we flagged earlier, and quality tech stocks led by MAGS.
Chart: A group of assets attempting to attract support
Biotech IBB (as of 260705); key long/short levels are shown by the red line
Aerospace UFO (as of 260705); key long/short levels are shown by the red line
Software XSW (as of 260705); key long/short levels are shown by the red line
Financial technology IPAY (as of 260705); key long/short levels are shown by the red line
Insurance KIE (as of 260705); key long/short levels are shown by the red line
The Magnificent Seven MAGS (as of 260705); key long/short levels are shown by the red line
If the matrix for the index and tech sector breaks upward, capital will rotate back into tech and drive another bottom-up rally; if the market continues to move sideways without breaking down, the new baskets will take in capital one by one. If the new baskets cannot attract support and tech also loses momentum, U.S. equity trading as a whole will come to a pause.
Chart: Momentum environment and tradability
US Momentum Environment (as of 260705). Above the green line is our home turf; above the yellow line, we can keep trading. A break below the yellow line, or even below the red line, marks a weak area for us to avoid.
The momentum environment is hovering between the yellow and green lines. As with the purple rectangle at the index level mentioned earlier, Q2 will determine whether it moves up or down. Friends should keep following the Planet; I will share updates promptly.
Five. China Market
As emphasized in previous weekly editions, the China market has in fact been relatively fortunate since June. Its good fortune is not about how much the index has fallen, but about tradability.
Chart: Momentum environment and tradability
CN Momentum Environment (as of 260705). Above the green line is our home turf; above the yellow line, we can keep trading. A break below the yellow line, or even below the red line, marks a weak area for us to avoid.
Unlike the U.S. session, the consolidation in the China market has never broken below the green line in the environment indicator. Staying above the green line means that even if the index pulls back, internal basket rotation should remain strong and persistent. It is a market one can participate in and trade—that is what we mean by tradability.
I think friends who have been trading both mainland China and U.S. markets will have felt this acutely in their trading over the past few weeks.
Chart: Monitoring rotation across baskets in the China market
Rotation Regime (as of 260705): The green line shows the strength of the leading theme, the yellow line shows how quickly the leading theme is changing, and the Histogram shows the marginal weakening of the leading theme’s strength. High strength and slow rotation make for very good trading.
You can make money in both bull and bear markets. The market where you cannot make money is one without logic. Without logic, prices cannot unfold naturally; without a natural unfolding, there is no trend. Profits come only from smooth trends, whether long or short.
Chart: Positioning map
Red indicates unanimous shorts, green unanimous longs, and gray disagreement; gold-rimmed dots indicate movement toward the upper right (as of 260705)
Baskets moving toward the upper right (as of 260705)
Constituent stocks in Baskets moving toward the upper right that are themselves moving upward (long-only Basket filter) (as of 260705)
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Performance rankings over the past week
Trading in the Chinese market was concentrated in biopharma, robotics, precious metals, and unusual moves in the traditional industries of the hog cycle and textiles and apparel.We discussed pharmaceuticals in last week’s weekly report. They were the first choice for capital rotation, and this week they did indeed develop into the strongest direction for absorbing flows during the week:
Figure: On the day after the weekly report, mainland biopharma trading began a rebound from a bottom
SeeRead article
Six. Precious Metals
Figure: Gold
CMX gold (daily chart, as of 260705)
Gold was precisely held back at our long-short line, with the high falling short by just 0.6%...
You should know why prices move, why they stop, and where they stop. Other people out there may not know, but you should.
Last week’s weekly report“Precious Metals: Gold, Silver, Platinum & Trendline Drawing and Tacit Knowledge”
The same point as last week: once prices start moving, only prices themselves determine what happens. All news before a break of an important key level is old news, and all events are just “picking up scraps” (ultra-short-term scalping—picking up pennies and losing dollars). Profits come only from places where it is worth taking action. You can make very clear judgments about extremely microscopic market structure and direction, but that does not mean you have to trade them all. Sit well; require an outsized return for every effort.
Figure: Silver
CMX silver (daily chart, as of 260705)
Silver was the same: it closed exactly at the gold line.
Just keep a close eye on prices; there is not much else to say.
Figure: Platinum
NYM platinum (daily chart, as of 260705)
Figure: Palladium
NYM palladium (daily chart, as of 260705)
The reason platinum and palladium don’t get discussed much is that they are both white precious metals, essentially the same as silver; only the names are different, everything else is the same. Just a quick update.
Seven. Alternative Assets
Xiao Huang (daily chart, as of 260705)
The bulls have reclaimed a key short-term level, A break below the red line would signal that the bullish reversal has failed (note the SO filter)。
Eight. Soft commodities (El Niño): cocoa, coffee, soybeans, raw sugar, and orange juice
In last week’s newsletter, I specifically mentioned signs of a potential move in Softs,
This week, volatility expanded as expected:
Figure: Cocoa is still forming a base
Cocoa (daily chart, as of 260621)
Likewise, others don’t know why the price has paused; we do, because it has reached its target price. Price is consolidating at the target. Further upside requires the base-building process to finish and price to break free.
Figure: Coffee breaks above the range
The bottom-pattern reversal trade mentioned in last week’s newsletter, As of this week, price has moved up from the bottom of the trading range and broken above its upper boundary. Move the stop-loss up to the midpoint of the range (the edge of the area with concentrated trading within the range).
Coffee (daily chart, as of 260621), stop-loss moved up
Figure: Soybeans break above the range
Soybeans (daily chart, as of 260621), stop-loss moved up
Both white lines marking the upper and lower boundaries given in last week’s newsletter were tested this week, and the price continued to consolidate in a narrow range. A break above the upper boundary would trigger an upward move; a break below the lower boundary would trigger a downward move. Sit tight and wait; don’t rush.
Figure: Raw sugar and how to use the dataset
Raw sugar’s take-profit point moved up
Raw sugar (daily chart, as of 260621). The summary data on the arrow date indicates a shift from lagging to improving.
Three things, 1) The number of assets worldwide is countless, and I can’t discuss all of them even if you want me to, The data summary is the distillation of many years of my work; be sure to make good use of it，2) The price should not fall below the horizontal line during an advance; 3) For the uptrend to continue, it needs to break above the downtrend line.
CANE (daily chart, as of 260621)
COFCO Sugar (daily chart, as of 260621)
They all have the same structure.
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Chart: Orange Juice
Orange Juice (daily chart, as of 260705)
Orange juice is also forming a bottom reversal; the reversal should not break below the white line.
Rice (daily chart, as of 260705)
Rice has formed a key candlestick. It may need to pull back to the rising trendline first. If it breaks below, longs can be closed for now while waiting for the next upward leg.
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A few final comments. In short, soft commodities are essentially trading on El Niño. The previous cycle’s broad-based rally also began in 23, and El Niño reached official advisory status in 6, with the phenomenon expected to almost certainly persist into early 2027, at a probability of about 97-100%; the probability of reaching very strong or Super intensity in late 2026 is about 60%.
The most important macro implication is climate:1H27 Global temperatures could rise to 1.8-2.0ºC above the pre-industrial baseline. This level would amplify Asian electricity demand and pressure from inadequate hydropower and would also increase the risk of short-term heat, rainfall and logistics volatility in the Americas.
Specifically, first, drought in Asia and Australia, alongside divergent rainfall in other regions, could disrupt soft-commodity and regional food supplies. Second, a weak monsoon and falling reservoir levels could increase local demand for thermal power and LNG. Third, export restrictions and trade substitution could amplify global price transmission. Fourth, rising cooling demand combined with hydropower shortages could trigger regional energy price spikes. Fifth, high global grain inventories can limit systemic shortages, but cannot suppress local shortages and price volatility.
Below-normal rainfall and heat risks have already emerged in South and Southeast Asia, where soft commodities and food supply chains such as rice, sugar, palm oil, coffee, cotton and pulses are most sensitive. Australia is also showing widespread below-normal rainfall nationwide, increasing the risk of downward revisions to wheat and barley exports. Latin America is more divided: drought in the north could affect coffee, sugar and staple crops; South Asia is the main transmission channel for near-term global commodity risks. Current forecasts point to a below-normal monsoon, with rainfall at 90% of the long-term average and a high probability of local shortfalls. India’s position in rice, sugar, cotton, pulses and global food trade means that production shortfalls can quickly turn into export-restriction risks; if export bans or stock-release policies come into play, price shocks will spread from local supply and demand to global trade chains.
Weather sensitivity can also affect logistics chains, such as copper mining, ports, railways and road transport, creating a risk-based upward bias for metals.
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Of course, weather and news ultimately come down to price. We just need to keep an eye on prices.
I’m grateful for everyone’s kind regard, but I’m not important and have no plans to become famous. I prefer to keep my head down; the content on our private Planet is for our own community, and we try not to share it externally.
Thank you all here. Thanks to all my friends.
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