To The Moon

Our Call That Gold and U.S. Equities Had Topped Out in the Near Term Has Been Validated Again

Hello everyone, welcome back to the Macro Strategy Weekly.

In this weekly report, we regularly select contributors within the community who have relevant professional expertise to share and consolidate their market-strategy views. We also track, on a weekly basis, how those strategy calls have played out.

Before turning to this week’s strategy discussion, let us review the results of our previous calls. On July 21 this year, our strategy weekly published an analysis titled:

Macro Strategy Weekly: Treasury Bond Purchases Are Bearish for Markets—U.S. Equity and Gold Bulls Should Be Cautious

The report received substantial engagement and sharing at the time. As indicated by its title, the report anticipated declines in both gold and U.S. equities. Two weeks later, those calls have played out accurately.

With that review complete, let us move on to this week’s strategy discussion.

Summary of This Week’s Views

• A bearish positioning backdrop makes range-bound trading at elevated levels more likely.
  U.S. equity fund flows have weakened. Institutional gross exposure remains high, but net leverage is clearly bearish. At the same time, one-month S&P 500 call skew exceeds put skew, suggesting that some market participants are reducing equity exposure while simultaneously using highly leveraged derivatives to position for further upside. Combined with seasonally weak conditions in September, the tendency for turning points to occur in February, May, August, and October, and the possibility of a medium-term rise in the VIX, the likelihood of a sustained, sharp rally in U.S. equities appears limited.

• Fundamentals remain strong, so a direct bet on a sharp market decline is not advisable.
  Earnings among S&P 500 constituents remain strong. Nvidia’s earnings report indicates that AI demand and capital expenditures have not yet peaked in the near term, while growth is also spreading to non-AI companies. Although the S&P 500 has risen meaningfully year to date, its price-to-earnings ratio remains in the low-to-mid 20s, suggesting that the rally has been driven primarily by earnings rather than pure multiple expansion. Therefore, while rising yields are a headwind, the probability of a weekly-chart-scale collapse before the midterm elections remains limited.

• The VIX and Nasdaq are awaiting a breakout.
  After falling below 15, the VIX can historically remain at depressed levels for an extended period. Its remaining downside may now be limited, but the timing of a rebound remains uncertain. The Nasdaq has formed a consolidation triangle. If the VIX rebounds while the Nasdaq breaks down from that pattern, volatility could rise materially. Before confirmation, investors should avoid rushing into one-sided short positions.

• Selling puts remains a core strategy during a range-bound market.
  Investors may select strikes well below spot and systematically sell puts on QQQ or XLF. Alternatively, after a sufficiently deep correction in semiconductors, investors may sell weekly Nvidia puts below technical support in order to capture time decay. If the underlying breaks below the strike price, the position must be closed or adjusted promptly. Selling puts does not mean the strategy is risk-free.

• Commodities may be poised for catch-up gains.
  The ratio of a broad commodity index to the S&P 500 has approached historical lows not seen since 1970. Prices of copper, iron, rare metals, energy, and agricultural products have not yet fully reflected demand generated by the expansion of the AI supply chain. If U.S. equities remain range-bound at elevated levels rather than experiencing a rapid selloff, raw-material sectors may see catch-up gains, creating an opportunity worth monitoring in the next phase.

Main Body

Last week, U.S. equities traded in a high-level range as news related to resilient growth, sticky inflation, and the delivery of AI-related earnings continued to interact.

According to data from the U.S. Bureau of Economic Analysis, U.S. real GDP grew at an annualized rate of 1.5% in the second quarter. Consumption growth was revised up to 3.4%, while private domestic final sales growth was revised up to 4.2%. July headline PCE and core PCE inflation rose 3.7% and 3.3% year over year, respectively, leaving inflation above the Federal Reserve’s 2% target.

According to U.S. Treasury announcements and market data, the Treasury will increase the size of liquidity-support repurchase operations for nominal long-term Treasury securities. However, the 10-year Treasury yield remained elevated at 4.710% over the weekend, indicating that the constraint imposed by high interest rates on equity valuations has not been removed.

At the corporate level, Nvidia reported second-quarter revenue of US$96.22 billion and adjusted EPS of US$2.22, according to its earnings release and Reuters reporting. The company also guided for approximately US$108 billion in revenue next quarter. The results remain strong, and expectations for continued AI demand may continue to support technology heavyweight stocks.

Against this backdrop, calculations based on the closing prices of the Sector SPDR ETFs show that SPY rose 0.47% last week. However, only three sectors advanced: Communication Services, Information Technology, and Financials, which gained 1.43%, 1.30%, and 1.08%, respectively. Internal market breadth therefore remained weak. The charts below further illustrate sector performance, valuation dispersion, and the equity-bond yield spread.

The U.S. equity market continued to exhibit structural divergence during the week. SPY posted a modest 0.47% gain, but only Communication Services, Information Technology, and Financials advanced. This indicates that the index’s resilience continues to be driven primarily by growth sectors and large-cap heavyweight stocks. In valuation terms, Technology, Real Estate, and Health Care rank among the sectors with the highest P/E multiples.

From the perspective of relative equity-bond valuation, the S&P 500 earnings yield remains below the 10-year Treasury yield. The equity market’s static earnings compensation therefore remains weaker than the risk-free rate.

The market does not lack upside potential; rather, it has become more sensitive to earnings delivery and changes in interest rates. For high-valuation assets to sustain their premiums, corporate earnings must continue to be revised upward, real yields must decline, or risk appetite must rise further. Conversely, if long-end yields remain elevated, inflation constraints intensify, or corporate earnings disappoint, valuation-adjustment pressure could be amplified.

S&P 500 Forward P/E Ratio and Its 10-Year Average

A negative spread does not necessarily imply that equities must decline. However, it indicates that the static earnings compensation available to investors is below the risk-free rate. High valuations are therefore more dependent on earnings growth and declining interest rates. If long-end yields remain elevated or earnings reports disappoint, valuation volatility could increase.

S&P 500 Earnings Yield Less the 10-Year Treasury Yield (Monthly)

Last week, Nvidia’s results exceeded expectations across the board, confirming that AI capital expenditures are still accelerating. This should continue to support sentiment toward technology heavyweights in the near term.

This week, investors should focus on four indicators:

• The 10-year U.S. Treasury yield: the valuation anchor; 4.8% is a key resistance level.

• Core PCE: a key determinant of interest-rate-cut expectations.

• The breadth of participation across the AI computing-power supply chain: this helps determine whether the rally is spreading from leaders to the broader industry chain.

• The number of advancing sectors: this indicates whether the index’s resilience is healthy and broad-based.

If yields stabilize and sector breadth improves, the market may transition from a narrowly led rally toward a more balanced recovery. Otherwise, investors should remain alert to the possibility of amplified volatility in high-valuation sectors in a high-rate environment.

Featured Community Contributors

@程俊Dream：Nonfarm Payrolls in Focus: Will Gold Hold as Equity Indices Reassess?

Within just one week, the probability of an interest-rate hike surged by nearly 20 percentage points. This was driven entirely by comments from Waller, rather than by any major economic data releases.

Based on historical experience, only a probability above 70% tends to produce a near-certain outcome. The current probability, still below 60%, is not yet decisive. If this trend continues, this week’s nonfarm payrolls report will deserve close attention. The market has once again entered an environment in which weak data support risk assets, while strong data raise the probability of rate hikes and weigh on markets.

If gold and Bitcoin reverse sharply lower while the Nasdaq breaks below its prior low, this would signal a broadening of bearish sentiment. Conversely, if this week’s nonfarm payrolls report is strong enough to stabilize risk assets and extend their rebound, the market may be entering the final wave of a recovery rally. Once that rally concludes, it could offer an attractive opportunity to sell at relatively elevated levels.

Crude oil remains similar to last week: it is on the verge of a breakout. The long-term bullish view remains unchanged, although the move may depend on a news catalyst. In addition, crude oil continues to exhibit a negative-correlation dynamic with most other assets.

$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $微型NQ100指数主连 2609(MNQmain)$ $标普500ETF(SPY)$ $标普500(.SPX)$ $SP500指数主连 2609(ESmain)$ $微型SP500指数主连 2609(MESmain)$ $标普500波动率指数(VIX)$ $道琼斯指数主连 2609(YMmain)$ $微型道琼斯指数主连 2609(MYMmain)$ $道琼斯(.DJI)$

Macro Strategy Takeaways

For crude oil, continue to hold the long position established at an average price of 75. The stop-loss has previously been raised to the entry level to ensure a no-loss outcome, although a stop below 74 may be more consistent with trading logic. Targets remain unchanged at 95 and 115, with half of the position allocated to each target.$WTI原油主连 2610(CLmain)$ $微型WTI原油主连 2610(MCLmain)$

For gold, the short order was not filled. Nevertheless, short opportunities remain the preferred approach. Maintain limit sell orders at 4,830 and 5,170, allocating half of the position to each, with a stop-loss at 5,275 and a target at 4,000.

New low-level long order for this week: place a limit buy order at 4,265, with a stop-loss at 4,065 and a target at 4,765. This long order is valid only during the current week.$黄金主连 2612(GCmain)$ $微黄金主连 2612(MGCmain)$ $1盎司黄金主连 2612(1OZmain)$ $黄金ETF-SPDR(GLD)$

@Ivan_Gan：Gold’s Correction Arrived as Expected—Will 4,000 Hold as Support?

This week brings the release of another round of nonfarm payrolls data. If the data support a higher probability of rate hikes, financial markets may begin pricing in rate increases in advance for September. Investors should therefore pay close attention to the payrolls release.

The sharp decline in gold prices had long been expected. Last week’s article clearly advised investors to take profits. Following the decline, short-term traders may attempt to trade a rebound. The area near 4,450 represents support, but expectations for the rebound should not be excessive. It is preferable to close positions before the nonfarm payrolls data are released.$黄金主连 2612(GCmain)$ $微黄金主连 2612(MGCmain)$ $1盎司黄金主连 2612(1OZmain)$ $黄金ETF-SPDR(GLD)$

If this week’s payrolls report once again increases the probability of rate hikes, New York gold prices may continue falling in September and retest support at 4,000. Short-term traders should monitor this scenario closely.

If the payrolls report increases expectations of rate hikes, it could raise refinancing costs for AI technology companies. This may slow the pace of AI-sector expansion, trigger a reassessment of valuations, and ultimately be reflected in the performance of equity indices.

Nasdaq index futures are currently trading near the 20-week moving average. If they decline further and break below that average, the recently bullish market sentiment may shift. The index could then enter a staged correction lasting several weeks or even months, with a potential decline of 10% to 20%.

$英伟达(NVDA)$ $谷歌(GOOG)$ $特斯拉(TSLA)$ $苹果(AAPL)$ $微软(MSFT)$ $Meta Platforms, Inc.(META)$ $亚马逊(AMZN)$

U.S. Treasury Trading Product Suggestion

The 10-year U.S. Treasury yield futures launched by CME provide transparent pricing and allow investors to trade changes in yields directly, without having to calculate Treasury yields independently. This lowers the operational threshold for trading interest-rate movements.

Directional reference:

• If investors believe the 10-year Treasury yield will not break above 5%, they may consider shorting the futures contract.

• If investors expect yields to rise, they may consider going long the futures contract.

Macro Strategy Takeaways

1. Last week’s U.S. equity-index put-selling strategy generated a return of 1%. This week, U.S. equity indices are trading near the 20-week moving average. A decisive break below that level could lead to a correction lasting several weeks or months, with a potential decline of 10% to 20%, depending on the path of interest-rate hikes. Given the significance of this week’s data, no put-selling strategy is recommended this week.

2. Gold appears to have formed a cyclical peak that is highly consistent with historical price patterns. If the nonfarm payrolls report is strong and raises expectations for rate hikes, gold may correct again toward 4,000 in September. Therefore, this week’s gold strategy may involve selling a small amount of put options near the 4,000 strike.

3. Euro futures are worth monitoring again. A small short position may be considered, with a stop-loss placed near new highs. Because the stop-loss distance is relatively wide, position sizing must remain very light.

@Owen_trading room:Why Sell Puts Still Make Sense Now — And the Big Opportunity Brewing in Equities

According to the latest Bank of America fund-flow data, global equity markets continued to receive net inflows through last week, while U.S. equities experienced net outflows. Moreover, U.S. equity outflows accounted for a substantial portion of overall global equity-market outflows, making them the principal driver.

Goldman Sachs prime brokerage data also show that institutional investors’ gross and net leverage toward U.S. equities rose slightly in the latest week, but overall positioning remains cautious, with net leverage clearly bearish.

The options market presents a different contradiction. One-month S&P 500 call skew is materially higher than put skew. This suggests that some traders are withdrawing substantial capital from the equity market while simultaneously using highly leveraged derivatives to position for upside, out of concern about missing a potential rally.

This mismatch—institutions positioning defensively while traders chase upside—often causes the market to remain range-bound at elevated levels rather than immediately choosing a clear direction.

Although bearish signals are increasing, it is not appropriate to simply conclude that U.S. equities are about to suffer a sharp decline. Earnings among S&P 500 constituents remain strong. Nvidia’s latest earnings were again impressive, and AI infrastructure demand and capital expenditures have not yet shown clear signs of peaking in the short term.

At the same time, earnings growth among S&P 500 constituents excluding AI-related stocks is also improving. This suggests that growth from the AI industry chain is not confined solely to a handful of leading companies but is already being transmitted to a broader set of businesses.

$标普500ETF(SPY)$ $标普500(.SPX)$ $SP500指数主连 2609(ESmain)$ $微型SP500指数主连 2609(MESmain)$ $标普500波动率指数(VIX)$ $英伟达(NVDA)$

Source: Goldman Sachs Research

Second, although the S&P 500 has risen considerably year to date, its overall P/E ratio remains in the 20s and has not expanded materially in tandem. This indicates that the primary driver of index gains remains earnings growth rather than multiple expansion alone.

For this reason, although rising yields do constrain equities, the impact may not be as severe as initially expected. At least before the midterm elections, a broad market collapse on the weekly chart is unlikely to occur easily.

A more reasonable conclusion is therefore that U.S. equities are in a bearish, range-bound regime at elevated levels. Seasonal factors and positioning structures constrain upside, while strong earnings continue to provide market support. Continued volatility within a range is more likely than an immediate and substantial decline.

Regarding the VIX, the only firm conclusion at present is that its room for further decline may be limited and that a rebound is likely at some point in the future. However, it is still too early to determine whether that rebound will begin this week or require several more weeks.

The more counterintuitive signal comes from the relative price relationship between commodities and the S&P 500. The ratio of a broad commodity index to the S&P 500 has fallen to an extremely low level not seen since 1970, approaching historical troughs.

This implies that AI-related assets and broad equity indices have already risen significantly, while prices of copper, iron, rare metals, tungsten, germanium, molybdenum, energy, agricultural products, and other raw materials have not undergone a comparable revaluation.

As the AI supply chain continues to expand, demand for related metals and energy may continue to rise. These overlooked raw-material assets could therefore experience catch-up gains.$能源ETF(159930)$ $COMEX铜主连 2612(HGmain)$ $微型铜主连 2612(MHGmain)$ $英伟达(NVDA)$ $谷歌(GOOG)$ $特斯拉(TSLA)$ $苹果(AAPL)$ $微软(MSFT)$ $Meta Platforms, Inc.(META)$ $亚马逊(AMZN)$

Macro Strategy Takeaways

The risk of gradually rising 10-year and 30-year Treasury yields is unlikely to dissipate in the near term. The AI growth cycle has not yet peaked, and the pricing effects of higher demand for related raw materials and downstream AI products have not yet been fully transmitted.

This suggests that inflation risks are unlikely to reverse quickly. Even if the Treasury increases bond-buying volumes, this may still be insufficient to offset substantial interest costs and corporate bond issuance demand. As a result, rising long-term yields—or persistently high yields—may become the new normal.

Under this scenario, systematically selling weekly equity-index puts and continuously rolling short put positions on bank-sector ETFs may be opportunities worth considering.

From a technical perspective, investors may use QQQ’s prior low as a reference for selecting lower strike prices and roll weekly short-put positions.

$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $微型NQ100指数主连 2609(MNQmain)$

For XLF, the area below the prior breakout level may also serve as a reference for selecting strikes for put-selling strategies.

In addition, because the semiconductor sector has recently undergone a sharp decline and risks have been released more fully, investors may consider systematically selling weekly Nvidia puts below its prior technical support level.

Second, investors may consider buying VIX bullish exposure on dips. This can both prepare for a potential VIX rebound and partially hedge the risk of the bullish equity-index positions described above.

Fourth, based on the expectation of a VIX rebound, investors may consider a higher-risk, higher-return strategy: a long straddle. Specifically, investors may purchase both at-the-money QQQ calls and puts with approximately two weeks to expiration, using light position sizing. $纳指100ETF(QQQ)$

If the VIX rebounds, the position should be closed promptly to realize profits. The key risk of a long straddle is holding the combination for too long. If no profit has materialized after roughly one week, the position should generally be closed immediately. In addition, if the VIX falls below 15, the position should be stopped out.

Fifth, investors should monitor the U.S. Dollar Index, which has now broken above its 20-day moving average following a sharp rally.

Each time the Dollar Index breaks above its 20-day moving average, it has historically tended to experience a meaningful daily-chart up-leg. If the anticipated primary uptrend on the daily chart plays out, this could create an opportunity to short the euro.

One practical approach is to use the euro’s 5-day moving average as a trading guide: remain bearish if the euro breaks below the 5-day moving average, and stop out if it rises above that average.

$欧元主连 2609(EURmain)$ $美元指数(USDindex.FOREX)$

Follow-Up on Last Week’s Strategy Results

Cheng Jun’s Strategy Last Week

The previous long euro futures position was executed at 1.1420. As the market has recently begun to move, the stop-loss has been raised further to 1.1570. Targets remain unchanged at 1.1770 and 1.2420, with half the position allocated to each.

For crude oil, continue holding the long position established at an average price of 75. Given that the market has stabilized, the stop-loss was raised to the entry price, although a stop below 74 may be more consistent with trading logic. Targets remain unchanged at 95 and 115, with half the position allocated to each.

For gold, after last week’s sharp rally, there was clearly no need to attempt bottom-fishing long positions. However, limit short orders at higher levels remain in place. The preferred approach remains to short gold, with limit sell orders at 4,830 and 5,170, allocating half of the position to each, a stop-loss at 5,275, and a target at 4,000.

P.S. Once the first profit target is achieved, the stop-loss will automatically be adjusted to the entry level. Any revisions after execution will be updated in subsequent articles.

Result: The long euro and long crude oil strategies were profitable; the gold limit order was not filled.

Gan Canrong’s Strategy Last Week

Last week, the U.S. Treasury unexpectedly increased long-bond repurchases, which had a somewhat negative impact on markets. However, the ultimate market reaction still depended on the following week’s nonfarm payrolls report.

1. Both the Nasdaq and S&P 500 retraced to their 20-day moving averages. This week, the focus is on whether those levels can provide support. If prior strategies are stopped out, investors should remain on the sidelines.

2. Gold entered a high-pressure zone. Investors who had previously bought the dip could take profits.

3. Last week’s rolling equity-index put-selling strategy did not generate realized profits. The options initially opened would have been profitable at expiry, but the Treasury-related news led to a sharp increase in margin requirements for equity-index options. Without adding margin, the position was forced to reduce at a floating loss, and the profits disappeared. This week, the strategy remains to continue rolling new positions. Option implied volatility has increased slightly, and Nasdaq puts with strikes more than 8% below spot may be sold.

Result: The call to take profits in gold was validated accurately, and the rolling Nasdaq put-selling strategy became profitable.

Owen’s Strategy Last Week

Strategy One: Reserve approximately 6% of downside room when selecting lower-strike puts to sell and capture time value. For example, for QQQ, put strikes below 661 may be used as a reference. The prerequisite for any short-option strategy is strict stop-loss discipline. Once the underlying price decisively breaks below the strike price, the risk exposure must be addressed immediately.

Strategy Two: Continue considering gold put selling to capture time value. The area below the 20-day moving average of front-month gold futures—approximately below 4,413—may serve as a reference zone for weekly put strikes. If the price breaks below the strike, stop out promptly.

Result: All strategies were profitable.