To The Moon

In a stock market environment with ambiguous directionality and persistent consolidation, capital flow data often serves as the primary reference indicator for traders because these data are more authentic than sentiment. In last week's market liquidity data, we discovered: capital is accelerating its flight from US stocks, especially the seven major tech stocks tracked by Goldman Sachs, where the traces of institutional capital withdrawal are already quite clear. Moreover, the overall net capital flow of individual US stocks is once again showing an expanding outflow.

In the latest weekly data of institutional capital inflows and outflows for major seats compiled by Goldman Sachs, massive amounts of capital are fleeing US tech stocks, particularly the 7 star tech stocks:

$MACH7 TECHNOLOGIES LTD(M7T.AU)$ $英伟达(NVDA)$ $1.5倍做空NVDA ETF-Tradr(NVDS)$ $谷歌(GOOG)$ $特斯拉(TSLA)$ $Meta Platforms, Inc.(META)$

On the other hand, the latest week's data for individual stock capital also shows that net capital flow is once again in a state of expanding net outflow:

$标普500(.SPX)$ $标普500ETF(SPY)$ $SP500指数主连 2609(ESmain)$ $纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $道琼斯(.DJI)$ $道琼斯指数主连 2609(YMmain)$ $道琼斯ETF(DIA)$

Behind this phenomenon lies a massive macro risk that cannot be ignored: the "Strong Dollar".

The core view I want to emphasize right now is: the upward trend of the US Dollar Index may not have ended, and the market pressure it brings may have just begun. At this critical juncture, we should not easily make any unilateral directional bets. In a choppy market with unclear direction, option strangles and seller strategies (Sell Put/Call) still hold a higher priority.

From a technical perspective, the S&P index is gradually forming a top structure; once it breaks down from the consolidation zone, it may trigger a larger drawdown:

$加元主连 2609(CADmain)$ $日元主连 2609(JPYmain)$ $美元指数(USDindex.FOREX)$ $标普500(.SPX)$

However, the current consolidation pattern is a US broader market situation that can go either up or down, lacking clear directionality; therefore, for friends who prefer unilateral betting, real trading opportunities may still require patient waiting.

The Return of the Strong Dollar: The Converging Macro Thread

To understand the current stock market consolidation, we must first understand the dollar.

Technically, the medium-to-long-term trend of the US Dollar Index is very strong. On the weekly chart, the US Dollar Index has successfully broken through key resistance levels, and both the KST medium and long-term oscillators are simultaneously extending upwards. This provides a strong bullish signal technically, and it is entirely possible for the US Dollar Index to retest its previous highs.

The strength of the dollar is essentially a direct reflection of the market's expectation that the US will maintain high interest rates or even continue to hike them. Capital is profit-driven; when the interest on "risk-free" assets like US Treasuries gets higher and the dollar itself is appreciating, institutional capital will think: "Why risk buying US stocks at high levels? Isn't it better to pull the money out, buy US Treasuries, and hold dollars to earn high interest?". Thus, driven by such fair value expectations, capital will withdraw from US stocks (especially the seven major tech stocks with already high valuations), and US stocks will naturally face immense pressure from profit-taking at high levels. Meanwhile, the US Treasury market shows a trend of bottoming out:

$20+年以上美国国债ETF-iShares(TLT)$

Look at this: the most sensitive and "clean" indicator reflecting rate hike expectations—the 2-year US Treasury yield—has already started to rebound again and is steadily stepping on the upward trend line, with the 10-year US Treasury yield following closely behind. This means that the market's expectation of maintaining high interest rates, or even hiking rates in the future, remains stubbornly high.

What is even more interesting is the data from the options market. According to a recent Bloomberg report, as of mid-June, the trading volume of call options for USD/CNY has far exceeded that of put options. This indicates that "smart money" is betting heavily on a strong dollar appreciation and continuing to suppress Asian currencies. All of this tells us a brutal truth: the cycle of global market ambiguity and consolidation brought by the stronger dollar is far from over, and the pressure may have just begun:

$美元/离岸人民币(USDCNH.FOREX)$ $SG人民币主连 2609(UCmain)$ $小型SG人民币主连 2609(MUCmain)$

HK/A-Share Markets: Struggling Under the Shadow of a Strong Dollar

Under the siphon effect of the strong dollar, global stock markets are facing immense pressure, but their performances vary.

The first to bear the brunt are the Hong Kong and A-share markets. Especially in the Hong Kong market, the performance of the Hang Seng Index is significantly lagging behind A-share indices like the STAR 50. This is because Hong Kong stocks, being a highly open offshore market, are far more affected by the tightening of USD liquidity than A-shares. Therefore, at this current stage, everyone should absolutely not rush to bottom-fish HK/A-share indices; the time is still far from ripe.

$恒生指数主连 2607(HSImain)$ $恒生科技指数主连 2607(HTImain)$

Looking again at US stocks, the S&P index is currently at a high valuation level, which inherently carries a strong need for turbulent pullbacks. From a technical pattern perspective, the S&P index is gradually forming a "rounding top" peaking trend, and the tail pattern in recent weeks has shown a flag consolidation structure.

The most headache-inducing part is that this high-level consolidation structure currently lacks clear directionality—both an upward breakout and a downward breakdown are possible. At this time, the position of S&P futures around 7430 points has become a crucial "lifeline". If the index falls below this point, it means the consolidation zone is broken, and S&P futures are highly likely to drop all the way to support levels at 7016 or even 6900 points, officially kicking off a large-scale pullback of about 8%.

Strategic Response: Abandoning Unilateral Bets and Embracing Options

Since the consolidation pattern can go either way, making unilateral bets is akin to gambling; so how can we make money in this chaotic market? My consideration is: using option strategies for defensive counterattacks.

Strategies we mentioned in previous articles, such as selling Puts on Micron and Nvidia at low levels and selling Calls on crude oil at high levels, are currently profitable, and there is a high probability of safely pocketing this premium before the weekly expiration date.

回顾：预判初步兑现，坚持 Short Put 赚取时间值！提防黄金「最后一跌」随时杀到

Although the recent strategy of selling Puts on the Healthcare ETF (XLV) below the 200-day moving average encountered a brief floating loss due to a large bearish daily candle and Gamma squeeze, I remain patient. XLV is currently gradually forming a bottom structure, and the probability of falling below 145 or even 147 before July 10 is relatively small. Once it breaks through the high of 161, it is even expected to continue rising:

$健康照护类股ETF-SPDR(XLV)$

Everyone should note that the current ratio of the healthcare sector to the S&P has dropped to its lowest level in nearly 25 years. Therefore, we believe that at current price levels, even if the US stock market experiences a significant pullback, healthcare stock prices will remain relatively safe; technically, we can just refer to the technical model in the chart above.

For Sell Put strategies on tech stocks (like Nvidia and Micron), we must keep a close eye on the "lifeline" of 7430 points for the S&P. Once the broader market breaks down, we need to take profit or stop loss on our seller positions and appropriately pocket the gains:

$美光科技(MU)$

In addition, since the market is facing a directional choice, we can completely consider an option straddle/strangle strategy: simultaneously buying S&P Puts and Calls at the current price. In this way, as long as the market ultimately chooses a direction and triggers a surge or plunge, the unilateral profit brought by the Gamma squeeze will be sufficient to cover the premium loss on the other side.