To The Moon

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $Dow Jones(.DJI)$ $SPDR Dow Jones Industrial Average ETF Trust(DIA)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $iShares Russell 2000 ETF(IWM)$

The U.S. stock market closed August with a stronger-than-expected performance. Expectations of a potential breakthrough between the United States and Iran regarding the reopening of the Strait of Hormuz, combined with strong earnings from major technology companies, helped the market maintain a relatively solid upward trend throughout much of the month.

However, as we moved into the second half of August, expectations for a meaningful U.S.-Iran agreement on reopening the Strait of Hormuz failed to materialize. Military tensions began to rise again, pushing oil prices higher and intensifying concerns over inflation. In addition, Federal Reserve Chair Kevin Warsh’s hawkish comments increased expectations for a tighter monetary policy environment, while elevated Treasury yields continued to place pressure on equity valuations.

As these headwinds persisted into the final part of August, the market gradually gave back some of its earlier gains and finished the month with a more restrained upward move. Despite several significant negative factors becoming increasingly visible in the middle and latter parts of August, the market ultimately held up considerably better than initially expected.

As a result, the market did not complete the transition into a correction trend during August as previously anticipated. Instead, it ended the month with the broader uptrend still extended.

However, we believe the sustainability of this extended upward move remains relatively low. From our perspective, the delay in the expected correction appears to be more likely the result of temporary shifts in supply and demand rather than a fundamental improvement in the market environment.

The key negative factors that emerged in the middle to late August—including higher oil prices, renewed inflation concerns, elevated Treasury yields, and growing expectations for tighter monetary policy—remain unresolved. More importantly, the uncertainty surrounding a potential reopening of the Strait of Hormuz and a broader U.S.-Iran ceasefire or peace agreement has not been meaningfully reduced.

Therefore, we continue to expect the market to transition into a correction trend in the near future. If this transition develops within our expected range, the current fundamental and macroeconomic pressures suggest that the market could remain in a corrective environment from the period following the U.S. midterm elections through the end of the year.

From both the daily and weekly perspectives, we believe investors should remain cautious during periods of strength rather than aggressively increasing exposure. Taking profits when appropriate, preserving capital, and maintaining a conservative approach to new positions should remain important as the market approaches the next major trend inflection point.