Today's US Stock Market Summary: Today's Rebound Is Not Simple — Pension Funds' Last Two Days of Selling, Wall Street's Washout, PCE Statistics Changed, South Korea Pours $518 Billion into Semiconductors

How Wall Street Conducted the Washout

In the 45 minutes before the market opened, institutions aggressively suppressed the semiconductor sector to create panic, inducing retail investors to sell at a loss and rotate into healthcare and the Magnificent Seven. After retail investors exited, institutions quickly scooped up shares at low prices and flooded in. Many semiconductor stocks subsequently staged a dramatic V-shaped reversal, even turning into a surge. Semiconductor stocks that closed with upper and lower shadows represent a final capitulation, as most retail investors surrendered.

Micron and SanDisk rebounded precisely after retesting the EMA20, replaying a classic historical pattern. Their post-earnings behavior is a textbook washout: breaking below the previous low, quickly recovering, retesting for confirmation, and breaking upward.

ARM once plummeted to around $300 near the EMA50, undergoing a violent washout, before eventually closing up $43.

Today, the two most resilient and best-performing sectors were semiconductor equipment and cybersecurity. The cybersecurity theme deserves a separate mention: AI development will not eliminate security issues but will instead create more vulnerabilities. AMAT and CRWD are worth watching.

On the geopolitical front, there was further progress, which was one of the main catalysts for today's rebound, although the impact of this factor is already very small.

The US and Iran agreed to stop attacking each other. Trump said Iran has requested a meeting in Doha, and Qatar is about to unfreeze $6 billion in Iranian assets.

In oil, prices have now fallen 40.95% from their recent highs. If geopolitical negotiations go smoothly, oil prices may face further downward pressure. My own judgment is that oil doesn't need to be worried about much this year, a midterm election year; $120 is the high for the year, and inflation will follow downward.

On the eve of the US 250th anniversary of independence on July 4th, unless there are extreme disruptors, geopolitical tensions are likely to ease for a few days, and short-term risk aversion will decline.

Today, the market collectively gapped up more than 1% at the open. The historical statistics of this signal are also worth including.

Historical data shows that a collective upward gap of more than 1% at the open is an extremely bullish signal: the probability of rising after 2 days is 75%, after 2 weeks 86%, after 3 weeks and 1 month it even reaches 100%, with an average return of 6.7% after one month.

This data aligns with the seasonal patterns we've been discussing. Tomorrow is the last day of June. Historical data shows that July is typically one of the strongest months for US stocks, especially in the statistics of the past 20 years.

Key events this week: Thursday's nonfarm payrolls are the focus, but I'm not too worried.

Tuesday: Watch JOLTs job openings data. Wednesday: Fed officials speak. Thursday: Nonfarm payrolls report and unemployment rate, the most important economic event of the week. Friday, July 3rd: Market closed for Independence Day.

I'm not worried about Thursday's data. White House chief economic advisor Kevin Hassett publicly stated before the nonfarm payrolls release that the indicators seen suggest the employment report will be strong but moderate, with no signs of overheating or loss of control. It is unlikely that June's nonfarm payrolls will significantly exceed expectations. May's beat was mainly due to the temporary impact of the World Cup, prompting companies to hire early — a one-time factor, not a trend.

Tesla surged 8.5% today. The technical picture is worth mentioning.

It has been in a long-term descending channel. In the short term, pay attention to the resistance zone between $413 and $415. Once it breaks through with volume, it could head straight for the upper channel boundary at $420 or even the $433 target, which is the fourth touch of the downtrend line. Rumors of a possible North American introduction of the Model Y long-wheelbase version in 2026 also provided some emotional catalyst.

Technical Analysis

Tomorrow, SPY's daily implied movement range is approximately upper band $746, lower band $735. If the market pulls back, previous resistance could turn into support, potentially forming a higher low around $735. This would also be a breakout retest of the downtrend line, creating an ideal right-side bullish retest buying opportunity.

The market is gradually transitioning from a high-volatility environment to a low-volatility bull market. The S&P has reclaimed and is above the Gamma flip line, in a positive Gamma state.

VIX fell 4.13% today to 17.65. The VIX chart clearly shows that when prices return above the flip line, VIX is severely suppressed, meaning the market has returned to a stable trend period of buying dips and selling rallies. The 10-year Treasury yield edged down 0.05%, and the dollar index is consolidating sideways.

All of this creates a favorable environment for US stocks to rise.

PCE Inflation Statistical Methodology Was Revised

For computer software and accessories, a composite index for gaming software was added. Since game product prices have been declining for a long time, this single item alone could lower May's core PCE by 0.1 to 0.2 percentage points.

For portfolio management services, the calculation now uses employment wage growth instead of asset prices as a benchmark. Since industry wage growth is relatively moderate, this item's inflation dropped from 21.6% to 9%, alone trimming core PCE by 0.21 percentage points.

For legal services, a long-unupdated single metric was discontinued and replaced with a more granular composite index, bringing the year-over-year increase from 7.6% down to 4.25%.

Together, these changes directly revised May's core PCE year-over-year down by 0.2 percentage points to 3.2%, and the full-year core PCE forecast for December 2026 was also adjusted from 3.2% to 3.0%. UBS warned that such revisions could reduce data transparency and raise concerns about manipulation, but the market currently only cares about the positive outcome: the need for rate hikes is further weakened, while rate cut expectations are heating up.

On the earnings front, Goldman Sachs raised profit forecasts for AI companies, which is a core reason supporting the rebound.

Goldman Sachs' latest strategy report says S&P Q2 overall earnings are expected to surge 22%. There are two driving forces: first, AI capital expenditure continues to explode. Nvidia and Microsoft alone contribute over 40% of total earnings growth. Second, AI demand is spreading from pure computing power to larger scenarios such as end-user consumption and enterprise software.

South Korea is pouring $518 billion into a national semiconductor strategy. The market's reaction was quite unusual, and it's worth explaining why.

The South Korean president announced a plan to double the country's memory chip production capacity within five years. Under normal circumstances, such massive expansion news should make the market worry about future oversupply, but instead the market rose. There are several layers of logic:

First, there is significant uncertainty in timing. Actual capacity coming online will take several years or even a decade. This is just a policy direction and cannot change the actual tight supply situation for global HBM and general-purpose memory in the next one to two years.

Second, incremental demand offsets the expansion concerns. South Korea is not only expanding memory capacity but also pouring huge funds into local AI computing clusters and data centers. Once these infrastructures are built, they will generate massive demand for memory hardware procurement, which balances out the supply risk from the memory factories' own expansions.

Third, the biggest and most stable beneficiaries are upstream equipment companies. South Korea's investment has a neutral impact on the short-to-medium-term memory supply-demand balance. But to build wafer fabs and packaging plants, massive equipment procurement is required. This provides highly certain long-term incremental benefits for upstream equipment companies like AMAT, Lam Research, and ASML — consistent with the logic from the previous article on semiconductor equipment stocks.

Summary of My Judgment for Today

Today's rebound was not driven by a single reason. It was a confluence of institutional washout, geopolitical easing, pre-managed nonfarm payroll expectations, systematic downward revision of PCE statistical methodology, upward revision of AI earnings forecasts, and South Korea's expansion boosting equipment stocks.

The historical win rate after a gap up of more than 1% is very high. The end-of-quarter Gamma structure has also returned to positive territory. The market is gradually transitioning from a fragile state to a relatively stable bullish environment. Even if nonfarm payrolls data itself is not weak the day after tomorrow, market expectations have already been calmed in advance, so it's unlikely to trigger real panic.

In terms of operations, continue to accumulate in batches as planned. Semiconductor equipment and cybersecurity were the most stable today and deserve more attention. The washout in the memory line is basically over. The precise rebound from the moving average shows that this wave of selling pressure has been largely digested.