• ...a necessary period of rest...

• ...tradability matters far more than the price level alone...

• ...the trading basket must not be left without fresh opportunities...

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I. Global Equities: Volatility in Latin American and Middle Eastern Markets

Global markets have not yet reached the point of a systematic shift to defensiveness, but prices themselves also do not support jumping back into positions that have been closed out in short or inconsistent areas, in a scalp-like fashion. This is a necessary period of rest; when it ends, the market will give a clear indication of what to do next.

If you believe the uptrend will continue, there is little need to chase these one or two bars while the market remains in short or inconsistent areas; if you do not believe that, pure speculation is even less worthwhile.

Chart: Major market positioning from a global equities perspective

ACWI (daily chart, as of 260614) Yellow line is support; the global equities uptrend is not over

In fact, outside technology, cross-market and cross-asset mean-reversion opportunities are emerging in many overlooked corners, such as Latin American equities, where lows within the range were broadly confirmed during the week, and Middle Eastern equities, seeing inflow trades as conflict tensions ease....

Take Chile, for example:

Chile is the market in LatAm most sensitive to high oil prices, because 100% of its crude oil demand depends on imports.The rapid rise in oil prices in 3 month has already delivered a threefold shock: inflation expectations have risen, the government has suffered a significant political blow from the fuel price increase of about 50%, and economic activity remains subdued.

It has fallen nearly 7% since the conflict began, and has lagged Peru and Colombia by more than 25% since the start of the year. That underperformance is primarily due to the oil price shock, inflation expectations, and political pressure, and these factors are now moving in a more favorable direction...

A pullback in oil prices, copper prices holding at high levels, the 2H26 reform agenda, and lower valuations...

If the market trades a moderation in the second derivative of oil prices, with copper prices providing support (mining directly contributes about 14% to GDP, and, including the multiplier effect on logistics, services, and supplier industries, its total economic footprint can reach 20% of GDP), and with the Reconstruction Bill as a key policy variable (the bill has a high probability of approval in 2H26), a break above the previous range ceiling here is reasonably worth anticipating.

Chart: A basket of Latin American and Middle Eastern markets

Peru, EPU (hourly chart, as of 260614): after reversing from the bottom of the range, it is attempting a breakout above the top; the move could end at the upper boundary, or it could build momentum and break above it

Chile, ECH (hourly chart, as of 260614): after reversing from the bottom of the range, it is attempting a breakout above the top

Argentina, ARGT (hourly chart, as of 260614): after reversing from the bottom of the range, it is attempting a breakout above the top

UAE, UAE (hourly chart, as of 260614): attempting a breakout above the range after reversing from the range bottom

Saudi Arabia, KSA (hourly chart, as of 260614): attempting a breakout above the range after reversing from the range bottom

Israel, EIS (hourly chart, as of 260614): attempting a breakout above the range after reversing from the range bottom

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Two. United States: structure matters more than specific levels; stronger economic fundamentals and a wave of small-cap stock moves

US macroeconomic data have been stronger than the market expected. The EPS revision is enough to explain why equities have not followed bonds in making a further, more severe downward adjustment. From an economic perspective, the equity pullback during this period looks more like a realignment with interest rates and bond prices, and the adjustment is now more than halfway complete.A stronger fundamental backdrop means that, from a trading perspective, investors should not simply exit AI entirely or switch to defensives. A more appropriate approach is to maintain AI exposure from the bottom up, while rotating into themes that are attracting capital and moving into the Leading quadrant as market pricing evolves.

Over roughly 5 weeks, of 72 major US economic releases, 65% came in above expectations, 20% below expectations, and 15% were neutral. Half of the downside surprises came from consumer confidence, and the other half from lagging Q1 GDP. Excluding sentiment-related data, around 80% of the data were strong. Treasury yields rose, and inflation edged higher, but this can largely be attributed to underlying growth resilience; there is insufficient evidence of stagflationary deterioration.Equities have not weakened materially; strong earnings revisions are the key support.

Chart: Industry risk exposure cut at the institutional level by AI

Equity L/S AI Industrials Cumulative Flows

Equity L/S hedge funds are cutting their gross exposure:Since 6 month 6 day, institutions have cut 1.8% of their US book, with flows concentrated in trimming longs in crowded winners. The main reason is a more active primary issuance calendar: funds need to free up risk budget for new supply, so they are making room by reducing existing long positions, rather than simply expressing a directional bearish view.

Gross exposure cuts have been concentrated in high-momentum and AI crowded trades:Since 5 month 21 day, US High Momentum names in the regional book have had their gross exposure cut by 1.9%, mainly driven by long selling. The net exposure to AI Winners fell to the 69th percentile after reaching a two-year high on 5 month 6 day. This level is not low, but it has cooled from an extreme state of crowding; near-term selling pressure is closer to a crowding reset and does not yet confirm that the theme has failed.

Our internal monitoring of tradability conditions shows that the market is already nearing the yellow line, Those seeking to sustain bullish market pricing must find an anchor to keep tradability above the yellow line, A break below the yellow line would mean that most strategies, whether institutional or retail, face failure. That failure would trigger more fundamental, strategy-level stop-losses in a chain reaction, followed by gradual shutdowns, position closures, and exits.

Chart: Market tradability remains above the yellow line; bulls need to keep the market in check here

Tradability monitor (daily chart, as of 260614); tradability refers to whether the logic behind price movements is continuing. A market where that logic does not persist is not tradable.

Tradability matters far more than the specific price level, Being above the yellow line means that the market structure itself rewards participation and invites you to join in, so naturally capital will come in to play. In any game, the thing to fear is not being dealt a bad hand; it is everyone else leaving the table and refusing to play with you. Things only really get bad when nobody is playing.

Chart: Trading baskets must not be left in a gap between the old and the new

The US trading baskets are showing early signs of a gap between the old and the new: either revive the technology trade, which has already begun to weaken gradually, or find a new basket to take up the slack.

In terms of behavioral details, hedge fund activity is shifting from a pure long unwind toward a more balanced risk reset:Over the past week, funds continued to sell AI Winners and High Momentum longs, while adding shorts in AI Industrials, Speculative Growth and Mag 7; positioning has become more two-sided. On one hand, crowded longs are being reduced; on the other, net exposure is being managed through the short book amid a new-supply environment. This means volatility in high-beta growth and mega-cap leadership will persist, but will not trigger a wholesale collapse in risk appetite.

For everyone, the trade baskets cannot be left without a clear direction; the market needs more consistent long opportunities. For now, the situation is in no way comparable to what came before. Either the technology trade, which has already begun to weaken gradually, needs to recover, or a new basket needs to emerge to absorb the funding narrative.

...

Another development is the unusual move in U.S. small caps. We mentioned it earlier in the week when the first signs appeared; by the close of the week today, it has become clearer.Against a backdrop in which a range of broad-market indices have shifted from Leading to Weakening, with some even slipping into Lag in the short term, small caps represented by IWM are showing strengthening in both absolute strength and momentum.

This is a fairly unusual trading outcome, particularly today, as discussion of the Fed’s next move continues to intensify, making it all the more noteworthy.

Chart: Unusual move in small caps

IWM/SPX (daily chart, as of 260614) is attempting to break through a key level

The chart above shows the price performance of IWM relative to SPY. It is now attempting to break through a key level dating back 23 years; a breakout here would trigger outperformance by small caps. In fact, it is not just IWM/SPY;Within small caps, this performance gap is even more pronounced. If you also add IWM/IWB, you will see an even deeper sentiment recovery in Russell 2000 relative to Russell 1000.

Chart: Russell 2000 relative to Russell 1000 is also seeing a deeper recovery

IWM/IWB (daily chart, as of 260614) is also attempting to break through a key level

IWM has risen about 19% since the beginning of the year, while IWB has gained about 8%, for relative outperformance of about 10 percentage points. It has begun to recover from the prolonged underperformance of IWM +26% and IWB +76% over the period from 2021 to 2025.

..... The source of this improvement in sentiment is more in the way of micro-level catalysts. Trading in Russell 2000 is focused mainly on earnings, new product launches, strategic partnerships, market opportunities and growth potential—in other words, on individual company fundamentals and event-driven factors.

..... By contrast, discussion of Russell 1000 is more thematic, focused on AI infrastructure, semiconductors, quantum computing, autonomous AI agents and the AI supply chain.

This may reflect some capital shifting to bottom-up bets as signs emerge that thematic trades are running short of fresh opportunities; if the tradability monitor falls below the yellow line mentioned earlier, these bottom-up trades will offer more alpha, but this part is best approached as a relative-value trade, rather than an outright one。 IWM’s relative sentiment advantage is highly susceptible to macroeconomic and geopolitical risks. If a risk event prompts investors to favor larger, more liquid assets again, small-cap relative sentiment could quickly give back its gains.

Chart: The macro shock from geopolitical events has a greater impact on IWM, while deleveraging in thematic trades stemming from the AI side has less impact

IWM (daily chart, as of 260614)

Another part of the thesis is that small- and mid-cap companies are among the core beneficiaries of AI at the edge in the real economy. These companies have long faced substantial labor cost pressures, while AI-led productivity gains may reduce the labor intensity of multiple industries and improve the operating leverage of small- and mid-cap companies, They are more sensitive to productivity gains across society as a whole, and this is a longer-term sensitivity with less speculative exposure. That is roughly the idea.

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Three. Fed update: there is only one focus—the U.S. equity market... Discussion of the expansion of the SQQQ yellow line

The Fed’s most natural course is to hold steady, and this has already become the institutional consensus. It is enough to know what the consensus is. I am writing this here so everyone is aware and does not waste time on an issue that is already more or less fully priced in. Since roughly a year ago, what the Fed does has had no material impact; the only thing with a material impact is asset prices themselves.

Chart: The policy decision itself is already highly consensual; trading risk is concentrated in the “tone.”

Institutional-side consensus survey

The current monetary-policy view is roughly as follows: 1) employment is turning higher; 2) consumption is slowing, but there is no risk of a cliff-edge decline; 2) inflation is being disrupted, but there is no endogenous overheating of the kind seen in 22. Given these three factual conclusions, the Fed’s best course is to do nothing. The next FOMC will most likely leave everything unchanged, then focus on the statement and dots, removing some of the language that tilts toward rate cuts. Rapid rate cuts and an immediate resumption of rate hikes are both extreme tail-risk paths at present.

When all is said and done, the bond market, futures market, and macro backdrop are all secondary. There is only one main theme: U.S. equities, driven higher by AI technology and rotation among the various baskets across its underlying segments.

U.S. equities are not falling, so the U.S. is safe and the macro fundamentals will not change. That is determined by the nature of the K-shaped economy. Problems will emerge only when the stock market is no longer safe. This is why shorting U.S. equities carries such a high risk. They may stop rising, but many people do not dare bet on a truly sharp decline. That is why you see news headlines appearing around so many key price levels.

...

Chart: The yellow line for SQQQ

SQQQ (hourly chart, as of 260614)The tail-risk hedging trade has been closed out.

The yellow line for SQQQ in the chart above is one we started drawing on Planet last Monday. For details, see Why this is a very important level; in fact, since we drew this line, whether you look at the one-hour chart, the four-hour chart, or even the daily or weekly chart, as of today it has precisely contained the main price action. This is the line that kills the technology bulls: a break through it would deal a serious blow to the trajectory of U.S. technology stocks.

If we absolutely had to add a lower boundary to this yellow line... (fill in Stephen Chow’s expression in King of Comedy yourself), then you could also say that the lower boundary is a prerequisite for technology stocks to continue moving higher:

Chart: The yellow line plus the red line for SQQQ

The lower boundary for SQQQ (hourly chart, as of 260614)

The reason it is not appropriate to open another position here (nor does the Planet model do so) and continue playing the scalp-trading game in AI technology at the index level or more broadly is that the odds here are genuinely very tight. If you want to short, you can simply wait until above the yellow line to act; if you want to go long, you can just as well wait until below the red line.

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Four. Technology: Korea, the Korean won, and updates to a batch of core technology proxy models

Let’s continue discussing AI.

The marginal risks for AI come from Token Maxxing, the bottleneck-assets thesis, and recursive self-improvement:The market still believes token demand will most likely continue to exceed supply, but the prices companies are willing to pay for tokens are coming under renewed scrutiny. Karl Keirstead’s work shows that 60% enterprise buyers are already focused on costs and ROI-based consumption metrics. If models’ self-iteration leads to step-change declines in compute cost per unit, power consumption, and memory requirements, the scarcity rationale for owning the bottlenecks in hardware and infrastructure would be weakened.

AI efficiency risks have limited impact at low valuations; now the downside asymmetry has increased.When an asset trades at around 3x earnings and expectations are very low, efficiency gains have a limited valuation impact. But now, with the AI complex already closer to pricing in perfection, if a technological path emerges that enables more to be done with less, the market will reassess the long-term rents from power, memory, compute capacity, and token pricing...

What you need to remember: under high expectations, any improvement in unit economics will compress Bottleneck Asset Premium。

Chart: The Korean index, as a proxy for core technology, remains in bearish territory

KOSPI (daily chart, as of 260614). Even if it returns to bullish territory, its slope can no longer deliver the return expectations we had for our long trade in early April.

The memory-driven rebound in the Korean index is supported by fundamentals. KOSPI completed a round trip of 13% within two weeks. The earlier decline was driven by global de-grossing of crowded technology positions, concerns about Fed tightening, disappointment with Broadcom's outlook, and uncertainty over potential Nvidia SOCAMM2 specification changes. This week's rebound has been strong and justified, but for now it has not brought the index back into bullish territory...

In addition, a new low on the rising trendline has formed, and there is a high probability of another return to support at the yellow line. Every change in trend slope faces repeated tests, especially the first pullback in a strong trend; the trendline will certainly be touched.

Chart: The won is approaching historic lows

KRWUSD (daily chart, as of 260614)

The divergence in the won has remained on our radar, and we check it every day. Investment flows have offset the support from current-account fundamentals, so KRW has failed to strengthen in tandem.At present, short positions in KRW are extremely crowded, and South Korean authorities have begun taking steps to limit the currency's weakness, creating a gradually more asymmetric opportunity in the won...

You can follow it yourselves, but don't jump the gun.

Also, once the won starts moving, it could cause some cross-asset issues. We can discuss that if and when it moves, but everyone should be aware of this possibility.

...

Chart: SK Hynix estimated price

 SK Hynix (daily chart, as of 260614); to turn bullish, it needs to move above the red line at a minimum

Chart: Estimated price of INTC

INTC (daily chart, as of 260614); it moved back above the bullish line on Thursday, and as of now the stop-loss price is above 107

Chart: Estimated price of AMD

AMD (daily chart, as of 260614); to turn bullish, it needs to move above the red line at a minimum

Chart: Estimated price of SOXX

SOXX (daily chart, as of 260614); to turn bullish, it needs to move above the red line at a minimum

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Five. Europe: A number of markets are facing breakouts above resistance

European trading can also be attributed in part to a fading of macro-level risks. Flows here are even more tilted toward tactical repair than in the United States: investors are buying back squeezed shorts and high-momentum names while shorting assets exposed to tangible goods and cyclicals. Overall, however, the trend is from bearish to bullish. In fact, European assets have also performed well across global markets over the past week.

Chart: European trades

Equity L/S EU Luxury Goods Cumulative Flows

The market has priced in two additional rate hikes this year, but that pricing is essentially fully baked in. If growth deteriorates from here, the likelihood of further substantial tightening is quite limited.

Chart: Greece

GREK (daily chart, as of 260614), facing a breakout above the upper boundary‘

Chart: Spain

EWP (daily chart, as of 260614), facing a breakout above the upper boundary

Chart: Italy

EWI (daily chart, as of 260614), facing a breakout above the upper boundary

Chart: European indices

FEZ (daily chart, as of 260614), facing a breakout above the upper boundary

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Six. Chinese market

Nothing to say. Dance when it dances, rest when it rests; there are grounds for both advancing and retreating.

The entire process is archived on the Planet; review it yourself.

...

Chart: Dance along; don't get yourself worked up

After the market close on May thirteenth, data from the Planet's master table showed The mainland market's uptrend has ended, see《26-05-31 WEEKLY WRAP》

Chart: Major indices peaked at the open on 5.14 and have fallen ever since

China Securities Index 500 (daily chart, as of 260614), has broken below the orange line

Shanghai Composite Index (daily chart, as of 260614): the bull-bear line has edged down, reaching the 1x target level

Shenzhen Component Index (daily chart, as of 260607): the rectangle broke down and the attempt to form it failed, so the bull-bear line has moved down; see《26-06-07 Ari’s Weekly Wrap》

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Seven. Precious metals trading update

Chart: Silver's gold line

CMX silver (daily chart, as of 260614)

For a full discussion of precious metals, see《26-06-07 Ari’s Weekly Wrap》After last week's post was shared by community members on the public account, someone said that drawing this gold line was the work of a charlatan. Perhaps it is; there's no way to refute that, so let them say what they will;

But the price really is continuing to move along the line we drew a long time ago.

As of now, it is still in the short-selling zone. The take-profit level for shorts has moved from around 75.35 last week to 69.2. A break above this level would constitute profit-taking on shorts. In fact, this is also a potential area where bulls could try going long early, but the upside from going long here is still limited. Later, trading will very likely take place within the range between these two horizontal lines, 69 and -75. The dramatic rally that silver permabulls are hoping for is not something to expect, at least until the price breaks above 75.

...

Chart: Forecast of gold's short-term bottom

CMX gold (daily chart, as of 260614)

Gold likewise fell further after last week's newsletter update, breaking below the previous sentiment-shock low from the month of 3. Here (at the green arrow indicated on the chart), our bottom-prediction signal was triggered. If this bottom fractal is fully formed, a short-term low may have been confirmed. Of course, all discussion needs to be cross-validated. You can follow the data in the master table of the core datasets on the community platform. The market is still in a deleveraging state, and a sharp upward trend cannot occur while deleveraging is underway, so there is no need to fret or try to “buy the dip.” Trying to scalp often makes little sense, because when a real rally comes, all the conditions will be in place; without broad confirmation, only small fluctuations are possible. The short take-profit price has moved from above 4540 last week to above 4380. Even an aggressive attempt to go long should wait for the price to break above this level; otherwise, the market will remain dominated by bears.

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VIII. Alternative assets

Alternative assets: The so-called perfect price structure noted last week remains valid. After triggering the 2x target price, a Failed Breakout, and the bottom-prediction signal, the price stalled in its decline here and attempted a rebound. It is now approaching the level where the short trade ends. The short take-profit level has moved from above 74k in last week's newsletter to above 64.6k (see the change in the red line on the chart).

Chart: The perfect price structure of alternative assets

Little Yellow (daily chart, as of 260614)

Note: Please comply with the laws and regulations in your jurisdiction and allocate personal assets only within the bounds of applicable regulations. This content is intended only for users in certain overseas regions.

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IX. Updates on several themes: MLCC, tungsten hexafluoride, lithium carbonate, energy storage...

Chart: MLCC basket (see26-04-25 “About MCLL and other passive components price increases”and the earlier newsletter update）

Basket proxy (daily chart, as of 260607) Since the Notes publication, +100%; reached the T2 target price, and the take-profit stop has been moved up slightly

Basket proxy (daily chart, as of 260607) Since the Notes publication, +170%; the top turned into a purple box, so the take-profit stop should not be moved

Basket proxy (daily chart, as of 260607) Since the Notes publication, +110%; the top turned into a purple box, so the take-profit stop should not be moved

Basket proxy (daily chart, as of 260614) Broke below the stop; profits have been taken and the position closed

Basket proxy (daily chart, as of 260614) Broke below the stop; profits have been taken and the position closed

Chart: Tungsten hexafluoride basket (see26-04-04“Tungsten Hexafluoride”）

Basket proxy (daily chart, as of 260614) Since the Notes were published +480%, the take-profit stop has moved from above 180 last week to above 230

Basket proxy (daily chart, as of 260614) Since the Notes were published +77%, the take-profit stop has moved from above 32 last week to above 45

Chart: lithium carbonate basket (see Lithium carbonate proxy move）

Basket proxy (daily chart, as of 260614), stop as shown

Basket proxy (daily chart, as of 260614), stop as shown

Basket proxy (daily chart, as of 260614), stop as shown

Basket proxy (daily chart, as of 260614), stop as shown

...

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...

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