Today's US Stock Market Summary: The market experienced another sharp drop followed by a recovery today—here's my take on the recent consecutive pullbacks and next week's outlook.

First, let's talk about what happened today. This volatility was actually caused by several mechanical factors piling up, not a single event.

The biggest one is the semi-annual Russell Index rebalancing, involving tracking assets of over $12 trillion. Nvidia replaced Apple as the largest weight in the Russell 1000, and newly large-cap stocks like SpaceX were also included. Passive funds were forced to adjust positions mechanically according to the new weight table. The seemingly terrifying volatility near the close was essentially these funds buying and selling mechanically according to the rules.

At the same time, we also had the quarter-end pension fund selling routine. This quarter, AI and semiconductors have surged too much, causing many institutions' actual holdings to significantly deviate from their target allocations. At quarter-end, they need to sell the overweight parts and buy back bonds and other assets to bring the ratios back in line. This is purely a routine portfolio management move, unrelated to company performance. This kind of large fund movement can cause significant market chaos at month-end. Next Tuesday, June 30, is the last trading day of the month, and the rebalancing is not yet fully complete.

There are also CTA automatic sell programs.

These three events combined led to the violent volatility seen at today's close. Sometimes such volatility is actually an opportunity.

On Friday, the S&P was almost the same as yesterday, the Nasdaq closed slightly lower, and the Philadelphia Semiconductor Index fell 5%.

On Friday, 324 stocks in the S&P 500 rose, only 178 fell, and 8 out of 11 sectors rose on a weekly basis. This indicates that large capital is quietly flowing back to other traditional, lagging heavyweights, showing signs of a healthy mean reversion. Money hasn't really left the market; it's just rotating among sectors, without panic-driven one-way flight. But I think it will rotate back before the semiconductor earnings season.

Today's industry heatmap also reveals a lot, with clear sector divergence.

Among the declining sectors, semiconductors fell 3.07%, one of the biggest decliners today, related to the earlier storage and Apple dispute. Internet content and information fell 1.42%, consumer electronics fell 3.10% (wait, the original says "消费电子产品多元化银行小跌0.96%" – it's actually "consumer electronics diversified bank small drop 0.96%"? Let me re-read: "消费电子产品多元化银行小跌0.96%" seems like a typo or combined phrase. Likely "消费电子产品" and "多元化银行" are separate? Actually original: "消费电子产品多元化银行小跌0.96%" probably means "Consumer Electronics, Diversified Banks, small drop 0.96%"? But later it says "消费电子产品涨3.10%" so maybe "消费电子产品" appears twice with different signs. Let's parse: Original list: "跌的板块里，半导体跌3.07%，是今天跌幅最大的板块之一，跟前面说的存储和苹果的争端有关。互联网内容与信息跌1.42%，消费电子产品多元化银行小跌0.96%，资本市场跌1.63%，资产管理跌0.38%，通讯设备跌3.39%，专用工业机械跌2.47%。半导体设备与材料这边更惨，跌了4.63%。" I think "消费电子产品多元化银行" is one item? Actually "消费电子产品" and "多元化银行" are separate sectors? The Chinese uses comma to separate items, but there is no comma between "消费电子产品" and "多元化银行小跌". Possibly it's "Consumer Electronics" and "Diversified Banks" both down 0.96%? Then later in the rising sectors, "消费电子产品涨3.10%" appears, so "Consumer Electronics" appears in both lists? That is contradictory. Maybe in the first list it's "Consumer Electronics" down 0.96%? But later it's up 3.10%. Let's check the original: "跌的板块里...消费电子产品多元化银行小跌0.96%" – I think it's a typo and should be "消费电子产品" and "多元化银行" separate. However, the original also later says "消费电子产品涨3.10%" – so maybe two different sub-sectors? Or the first one is a different sub-sector like "Consumer Electronics Diversified Banking"? That doesn't make sense. I suspect it's a formatting error. Let's keep as close as possible: perhaps "Consumer Electronics and Diversified Banking"? I'll translate as "consumer electronics and diversified banking small drop 0.96%" but note the later "consumer electronics rose 3.10%" may be a different sub-sector. I'll follow the sentence structure. Original: "消费电子产品多元化银行小跌0.96%" could be "consumer electronics diversified banking small decline 0.96%"? Actually, it's ambiguous. Let me read the rising list: "消费电子产品涨3.10%" – so there is a "Consumer Electronics" rising. I think in the falling list, it's "Consumer Electronics" AND "Diversified Banks" each small drop 0.96%? The original doesn't have a comma. I'll translate as "consumer electronics/diversified banks small drop 0.96%" but that's merging. Better to keep as is: "consumer electronics diversified banks small drop 0.96%". I'll do: "Consumer Electronics Diversified Banking small drop 0.96%". But later "Consumer Electronics up 3.10%". So I'll keep both.

Actually looking at context, it might be "Consumer Electronics" in falling list and "Consumer Electronics" in rising list could be two different categories? Unlikely. I think the falling list "消费电子产品多元化银行小跌0.96%" might be a mistake and should be "消费电子产品" and "多元化银行"? Many Chinese articles list sectors like that. I'll split: "Consumer Electronics, Diversified Banks, small drop 0.96%". I'll include a note? But I must not add extra. I'll translate exactly: "consumer electronics diversified banking small drop 0.96%" as one phrase. The rising list has "consumer electronics up 3.10%". Possibly the falling list has "Consumer Electronics" as part of a combined phrase? I'll treat them as separate items in the list, following the punctuation. Original: "消费电子产品多元化银行小跌0.96%" has no comma, so maybe it's one sector name? I'll go with: "Consumer Electronics Diversified Banking small drop 0.96%". Then later "Consumer Electronics up 3.10%" – it's okay to have same sector in both lists if there is a typo. I'll keep original.

Anyway, translating faithfully.

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Also "资本市场跌1.63%，资产管理跌0.38%，通讯设备跌3.39%，专用工业机械跌2.47%。半导体设备与材料这边更惨，跌了4.63%。"

Rising sectors: "软件基础设施涨4.13%，一般药品制造商涨3.82%，应用软件涨5.23%，互联网零售涨2.35%，多元化保险涨1.89%，消费电子产品涨3.10%。生物技术涨2.11%。计算机硬件涨幅最猛，涨了7.82%，汽车制造涨1.45%，债贷涨1.42%，娱乐涨2.43%，非酒精饮料涨2.00%，医疗计划涨2.02%，医疗设备涨1.77%。"

Note: "债贷" likely "Bond Lending"? I'll translate as "Bond Lending".

Also "可口可乐" maybe? No, "非酒精饮料" is Non-Alcoholic Beverages.

Ok.

Now I'll proceed line by line.Today's US Stock Market Summary: The market experienced another sharp drop followed by a recovery today—here's my take on the recent consecutive pullbacks and next week's outlook.

First, let's talk about what happened today. This volatility was actually caused by several mechanical factors piling up, not a single event.

The biggest one is the semi-annual Russell Index rebalancing, involving tracking assets of over $12 trillion. Nvidia replaced Apple as the largest weight in the Russell 1000, and newly large-cap stocks like SpaceX were also included. Passive funds were forced to adjust positions mechanically according to the new weight table. The seemingly terrifying volatility near the close was essentially these funds buying and selling mechanically according to the rules.

At the same time, we also had the quarter-end pension fund selling routine. This quarter, AI and semiconductors have surged too much, causing many institutions' actual holdings to significantly deviate from their target allocations. At quarter-end, they need to sell the overweight parts and buy back bonds and other assets to bring the ratios back in line. This is purely a routine portfolio management move, unrelated to company performance. This kind of large fund movement can cause significant market chaos at month-end. Next Tuesday, June 30, is the last trading day of the month, and the rebalancing is not yet fully complete.

There are also CTA automatic sell programs.

These three events combined led to the violent volatility seen at today's close. Sometimes such volatility is actually an opportunity.

On Friday, the S&P was almost the same as yesterday, the Nasdaq closed slightly lower, and the Philadelphia Semiconductor Index fell 5%.

On Friday, 324 stocks in the S&P 500 rose, only 178 fell, and 8 out of 11 sectors rose on a weekly basis. This indicates that large capital is quietly flowing back to other traditional, lagging heavyweights, showing signs of a healthy mean reversion. Money hasn't really left the market; it's just rotating among sectors, without panic-driven one-way flight. But I think it will rotate back before the semiconductor earnings season.

Today's industry heatmap also reveals a lot, with clear sector divergence.

Among the declining sectors, semiconductors fell 3.07%, one of the biggest decliners today, related to the earlier storage and Apple dispute. Internet content and information fell 1.42%, consumer electronics diversified banking small drop 0.96%, capital markets fell 1.63%, asset management fell 0.38%, communication equipment fell 3.39%, specialized industrial machinery fell 2.47%. Semiconductor equipment and materials were even worse, down 4.63%.

But there were also quite a few rising sectors, and the gains were solid. Software infrastructure rose 4.13%, general pharmaceutical manufacturers rose 3.82%, application software rose 5.23%, internet retail rose 2.35%, diversified insurance rose 1.89%, consumer electronics rose 3.10%. Biotechnology rose 2.11%. Computer hardware rose the most, up 7.82%, automobile manufacturing rose 1.45%, bond lending rose 1.42%, entertainment rose 2.43%, non-alcoholic beverages rose 2.00%, health plans rose 2.02%, medical devices rose 1.77%.

This divergence shows the logic of capital rotation: withdrawing some from the previously most crowded semiconductor hardware and rotating to software, biotech, consumer electronics, and other sectors that were relatively lagging earlier. Money hasn't really left the market; it's rotating internally.

My personal judgment is that this semiconductor pullback is temporary. I expect funds to flow back into this sector next week and the week after, especially with the emotional buildup before SK Hynix's listing, coupled with the catalysts from the July earnings season. Semiconductors are likely to become the focus of capital chasing again. The current position feels more like a halftime rest.

There were also two intra-industry chain events today.

Apple publicly complained about high memory costs, triggering a broad sell-off in Asian tech stocks, with South Korea's stock market triggering circuit breakers twice. The market is worried that if memory chips take too much profit, cloud giants will slow capital expenditure, dragging down the entire chain. But Micron's attitude is also tough, directly retorting to Apple that it was Apple's ruthless price suppression during the industry trough in 2023 that caused today's shortage. This indicates that upstream core hardware vendors are regaining pricing power.

On OpenAI, there are reports that due to the massive scale of financing and competition for funds with capital guzzlers like SpaceX, banking advisors have suggested deferring the $1 trillion valuation IPO to next year or even 2027. I think this is good news, not bad. The delay in the IPO means the pressure of capital absorption is postponed, which extends the bull market's lifespan. Those affected include SoftBank, which holds its shares, and investment banks like Goldman Sachs and Morgan Stanley, as well as Oracle, with stock prices under short-term pressure.

Semiconductor sector is also diverging internally; not all chip stocks fell equally.

Although Micron and SanDisk have been volatile recently, their daily charts have never effectively broken below the EMA20 on pullbacks. If Micron can fill the daily gap at 1086, that would be a good buying point, consistent with the logic that upward gaps are almost always filled. Plus, with SK Hynix entering the US stock market on July 10, the memory line is still worth focusing on in the coming period.

AMD and Intel are performing quite strongly, with their stock prices firmly consolidating above the 21-day moving average and EMA20, not plunging along with the broader market. These two are relatively resilient under the internal divergence within the semiconductor sector, indicating that funds within the sector are picking stocks rather than selling everything across the board.

MRVL is also relatively strong because investment banks raised their target price to 375, and a JP Morgan report earlier said that customized chip shipments may exceed GPUs by 2027.

GLW and COHR are also relatively strong in the optical sector.

NOK is a bit weaker and is still consolidating near the EMA 50. If the broader market bottoms out, NOK should be close to finishing its adjustment. We can look forward to the earnings report on July 22, which I think will be an important catalyst, leading to a decent stock price rise. It's advisable to accumulate cheaper chips before the earnings report.

SK Hynix's US listing is a separate line that needs to be discussed; it's an important variable for the next two weeks.

As Nvidia's largest HBM memory supplier, SK Hynix plans to officially list in the US in two weeks (July 10), with a fundraising scale of nearly $30 billion.

I think the semiconductor sector will likely strengthen before the July 10 listing due to expectations, but the listing day itself may be a turning point when the good news is fully priced in. We need to be careful and can take precautions in advance.

For example, if DRAM rises to 90-95 before July 10 and Micron rises to 1300-1400, you can consider reducing positions appropriately at that time, not because the fundamentals have deteriorated, but just for short-term swing trading. Those using call options with high leverage should be cautious to guard against sell the news. Long-term investors can stay put because there is also SK Hynix's earnings report on July 29.

Think about it from another angle: If you are a company executive or underwriter, holding a stock with such strong performance and needing to raise $29 billion within two weeks, the valuation discount (compared to Micron) will inevitably be compressed a bit to ensure a smooth fundraising. What would you do? You'd likely try every means to heat up the hype before the listing to make the pricing look better. So during this 14-day countdown sprint, prices will likely rise. Then comes the earnings report on July 29. These two events combined are the two most noteworthy time points in the first half of July.

There are a few other points to watch next week.

On the macro data side, from Tuesday to Friday next week, we will see a密集 release of JOLTs job openings, nonfarm payroll data, and unemployment rate. These employment data will directly affect the market's judgment of the Fed's path. More importantly, on Wednesday, July 1, the new Fed Chairman Warsh will deliver a major speech. This is one of his more密集 public comments since taking office. The market will pay close attention to his tone this time, which is consistent with the logic we've been tracking: constructive ambiguity and downplaying the dot plot.

For individual stocks, Oracle has recently experienced a low-probability mechanical sell-off. Technically, it's like a rubber band pulled to the limit, with a short-term oversold bounce likely at any time. The worst-case scenario is seeing the weekly 200 moving average near $145, where the decline will likely stop.

Gold and Bitcoin also show similar bullish divergence signals. Gold prices hit new lows, but the RSI made a higher low. This divergence, where prices make new lows but the indicator does not follow, often indicates a short-term bounce is coming. Bitcoin has also experienced extreme selling, hovering near the lower band of weekly implied volatility for several days. While the price hit new lows, the daily RSI is also rising, showing the same bullish divergence.

Looking at these signals together, the direction is consistent: whether it's tech stocks, safe-haven assets, or cryptocurrencies, this round of selling has pushed short-term sentiment to an extreme level. These directions will likely improve in early July.

Let me talk about my own trading over the past few days. I've been using the same strategy for four consecutive days.

Every day, I bought in batches during the first 30 minutes of the pre-market, and I will continue doing so next Monday and Tuesday. These are the last two days of pension fund selling. If you haven't finished buying, you can continue to pick up shares at this pace.

I still think Q will come to 696-700. Next week is the 250th anniversary of US Independence Day. Wall Street, or rather Trump, will likely want to support the market, so sentiment around this time will be relatively positive. The Fear and Greed Index is still around 25. If Q really probes 696-700 next Monday or Tuesday and the Fear and Greed Index simultaneously drops to around 20, that will be the perfect low-buying window in this pullback, with both technical and sentiment signals confirming.

The S&P has now fallen for four consecutive weeks. Historically, it is likely to rebound in the following weeks. Plus, earnings season is approaching, and I think this quarter's earnings will likely be decent.

I've been buying spot stocks in this bottom-fishing wave, not options, so I don't have much feeling about this short-term volatility. My mindset is good; I don't care how it swings. If you want to use options for leverage, try not to buy short-term calls. Such contracts decay quickly in time value, are hard to hold, and your emotions are easily affected by volatility. If you must use options, deep in-the-money (ITM) one- to two-year LEAP calls are relatively more stable. They are essentially closer to holding spot stocks, making it less likely to be washed out by short-term fluctuations.

There are a few historical data points worth including to help us assess the statistical significance of this position.

A set of statistics following a four-week consecutive decline in the S&P: Average return over the next 1 week is 0.8% to 1.2%, with an upward probability of about 62%, typical of emotional bounces and technical short covering after oversold conditions. Over the next 1 month, average return is 2.1%, with a 68% win rate, indicating a period of bottom consolidation, requiring more focus on true market support. Over the next 3 months, average return is 4.5%, with a 73% win rate, entering a steady recovery phase where fundamentals begin to dominate, and capital refocuses on core heavyweights. Over the next 6 months, average return is 8.4%, with a 78% win rate, returning to a bull market track with a clear upward trend and usually hitting new highs.

A four-week consecutive decline is not particularly rare in US stock history, but it usually means that short-term speculative funds have been largely washed out. The longer the time window going forward, the higher the probability of positive returns.

Why this 4-week consecutive decline combined with seasonality is worth referencing.

The last week of June tends to be weak historically due to pension funds mechanically selling stocks to buy bonds, sometimes even accelerating the decline with false breakdowns. But once July begins, global capital re-enters and builds positions in the new quarter. Historical statistics show that the first two weeks of July are among the highest probability winning trading day combinations of the entire year.

Putting these together, the current position looks more like a low point formed by seasonal patterns and technical overselling, not a signal for a true trend reversal downward.

Let me summarize my judgment.

The decline and volatility in recent days are essentially the result of mechanical fund flows from index rebalancing, pension rebalancing, and quarter-end portfolio window dressing, not a deterioration in market fundamentals. The AI industry chain is indeed experiencing a profit reallocation knockout competition, but this is a structural change. The improvement in market breadth for two consecutive days, combined with clear internal divergence and resilience in the semiconductor sector, all indicate a healthy mean reversion. The money hasn't left; it's just being mechanically redistributed.

In terms of operations, continue buying in batches according to plan. If Q comes to 696-700, that will be the best accumulation point in this pullback. After the S&P's four-week consecutive decline, historical patterns and the upcoming earnings season point to a higher probability of recovery. The window before SK Hynix's listing on July 10 remains worth watching. If prices rise a lot, take some profits appropriately. The employment data next week and Warsh's speech are the two biggest variables for the new week, but all the bullish divergence signals we see now point to an improvement in sentiment in early July.

I'll analyze the charts for the S&P 500, Q, and BTC for everyone later. Since bottom-fishing depends on the broader market, I'll use the market to tell you how to bottom-fish individual stocks.