Surge, skyrocket, China just finished its holiday, everyone is “rushing in to buy”

Source: Wall Street Intelligence Circle

Just as China began its holiday, the world experienced a round of "non-consensus rally":

- U.S. stock index futures plunged, rebounded after the sell-off, and then surged all the way up in a short squeeze. The Dow Jones rose 1.62%, the S&P 500 gained 1.02%, and the Nasdaq was up 0.89%. The biggest gainers are increasingly speculative: meme stocks soared, high-beta stocks jumped, the most-shorted stocks surged, and bitcoin-related stocks rallied. The market has entered the "as long as it goes up, it's fine" phase.

- Gold and U.S. Treasuries rose, with gold prices recovering to $4,600.

- After a decline, oil prices stabilized, with U.S. crude oil futures settling at $105.

Yesterday's market moves could easily be made into a movie.

First, previously it was out-of-control declines, now it's out-of-control rallies. Early in the session, there were reports that Trump might launch new military action against Iran. U.S. stock index futures tanked, and oil prices soared. Later, Alphabet released a very strong earnings report, which reversed global markets. Oil prices then plunged, and U.S. stocks rallied. In the past, after market declines, there would be hesitation, volatility, and back-and-forth. But now, every dip sees buyers rushing in; capital is "storming in," and the pace keeps accelerating. This is a kind of "madness with no consensus, but forced to buy anyway."

Second, Japan is the key player behind the scenes. Japan forcibly intervened in the foreign exchange market, suppressing the USD/JPY and indirectly pushing down oil prices and U.S. Treasury yields. There is speculation in the market that Japan's "bold action" received some sort of tacit approval (or even coordination) from the U.S. Treasury, with the aim of easing pressure on the strained U.S. financial system by suppressing the dollar and Treasury yields, given the Federal Reserve's inability to cut rates.

Third, today is Friday, also the first trading day of May. The direction and magnitude of the market's move are both significant—this could very well be the start of a major upheaval after a long period of calm.

The rally itself is creating greater volatility in the future. The market has entered an "irrational excitement" phase that is now rewarding recklessness.