Markets with excessive volatility inherently carry significant risks. In the short-term, speculative hot money makes price information largely irrelevant. Adhering to discipline means avoiding instruments with extreme volatility, as painful experience has shown that under such conditions, even if short-term profits are achieved, the ultimate outcome for most retail investors tends to be initial gains followed by eventual losses. The first section covers core trading instruments and strategy execution. The overall market assessment, from macro to micro perspectives, is as follows. Controversy surrounding the Epstein event increases the probability of US intervention in Iran, potentially to divert market attention. The nomination of a new Fed Chairman involved in a case, combined with the current global dominance of sentiment-driven trading, renders traditional analysis ineffective, necessitating disciplined caution. - Overall Commodity Trend: Domestic commodity markets weakened comprehensively, with widespread declines starting in the morning session. The Wenhua Commodity Index continued its deep decline after Friday's rally and subsequent pullback, severely damaging the previous bullish trend. - Sector Strength Comparison. - Strongest Sector: Chemical sector (only caustic soda and PVC maintained relatively strong performance at high levels, but PVC also retreated in the afternoon; remaining positions were automatically closed). - Weakest Sectors: Precious metals, non-ferrous metals, and crude oil sectors (precious metals and non-ferrous metals collectively fell sharply, with contracts like Shanghai silver and Shanghai copper hitting limit-down; the crude oil sector saw crude oil and fuel oil LU hit limit-down due to fading geopolitical risk premiums and supply surplus). - Core Strategy: Go long the strongest, go short the weakest. Engaging in ultra-light short-biased operations focused on the weakest sectors aims to maintain market feel without blindly "buying the dip," thereby avoiding the risks of being trapped or shaken out. Alternatively, using options instead of futures limits maximum loss to a few hundred yuan, effectively preserving market feel while controlling risk. The execution of specific instrument strategies is detailed below. - PVC: Trend positions were automatically closed during the pullback, strictly adhering to stop-loss/take-profit rules. - Precious Metals/Non-Ferrous Metals: Avoided risks associated with subsequent deeper declines. - Crude Oil and Energy-Related Products: Amid a broad commodity sell-off, it's difficult for any single sector to remain unscathed. Adopting a synchronised short-biased approach avoided losses from the limit-down moves in crude oil and fuel oil. The second section outlines overall trading outcomes. Risk Avoidance: Through systematic market assessment from macro to micro levels and early warnings on weak sectors, strict stop-loss measures were implemented. Although some losses occurred, they successfully avoided the limit-down risks in precious metals, non-ferrous metals, and crude oil, thereby protecting account capital. Strategy Validation: The decision to reduce and close trend positions for profit during the highs on Thursday and Friday perfectly avoided the deep correction on Monday, validating the effectiveness of the trend-following strategy. Overall, losses were prevented. Execution Discipline: The automatic closing of remaining PVC positions during the pullback demonstrated strict trading discipline, avoiding the pitfall of holding onto losing positions based on subjective conjecture. The third section involves review and reflection. A review of key market drivers is provided. - Global Situation: The US nomination of Warsh for Fed Chair sparked market expectations of a subsequently more hawkish monetary policy. Combined with the previously excessive gains in precious and non-ferrous metals, this triggered strong profit-taking demand, causing these high-flying sectors to plummet. - Geopolitics & Supply/Demand: Easing US-Iran tensions led to a rapid evaporation of crude oil's geopolitical risk premium. Coupled with the fundamental reality of global oil oversupply, the crude oil sector lacked rebound momentum, with cost-side pressures dragging down the entire oil complex. - Domestic Market: The previous bullish trends in hot sectors were completely shattered by the collective decline. Pessimistic market sentiment and panic selling exacerbated the limit-down moves in some contracts. Lessons learned and reflections are summarized. - Strengths: The "macro-to-micro" analytical framework effectively captured signals of overall market weakness. Accurate assessment of sector relative strength provided a solid basis for the short-biased strategy. - Shortcomings: Amid partial strength within the chemical sector, there is a need to further optimise take-profit rules for positions in strong instruments to better cope with sudden reversals in market sentiment. - Follow-up: Continuous monitoring of Fed policy动向, global geopolitical developments, and crude oil supply/demand dynamics is required for dynamic adjustment of trading strategies.
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