Over the weekend, we saw the US striking a temporary trade deal with China, causing the markets to rally aggressively today.
Short-term is definitely on risk-on mode now, but a 90-day deal instead of a permanent deal also suggests that both sides are not willing to cave in, so they are buying time to continue negotiating.
I’m currently riding the recent crypto wave, while observing the stock market without any major positions.
Short-term is definitely on risk-on mode now, but a 90-day deal instead of a permanent deal also suggests that both sides are not willing to cave in, so they are buying time to continue negotiating.
I’m currently riding the recent crypto wave, while observing the stock market without any major positions.
Comparing various asset classes, we see that gold and crypto continues to go up (these are the best 2 trades we have been holding), USDSGD continues to go down (I have been saying to hedge since the start of the year), and for stocks, the longer it can move sideways instead of going down, the stronger it is, and the more chance it can build a base for the next leg up.
Spencer Li (Synapse Trading)
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“Great course. I have studied about candlesticks and chart patterns before attending the course. However, not able to put them together to make consistent result. This course really stitch together and show me how to combine all the knowledge that I have learnt.”
“Excellent and comprehensive course. Very systematic and clarity in the course.”
“I am new to this so I am very pleased with the step by step guide as to kickstart trading in the post-program resources.”
“Spencer is very knowledgeable and really knows his stuff. The techniques are explained clearly and simple for beginners like myself to understand.” – Eugene
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[Monthly Market Wrap for May 2025]
Last week, markets were hit by a wave of uncertainty this week as U.S. inflation cooled but UK inflation spiked.
Trump reignited trade war fears with fresh tariff threats, and Moody’s downgraded U.S. debt.
Stocks fell, gold and Bitcoin surged, and volatility returned amid mixed earnings and policy surprises.
Read full blog post:
https://synapsetrading.com/?p=49622
Last week, markets were hit by a wave of uncertainty this week as U.S. inflation cooled but UK inflation spiked.
Trump reignited trade war fears with fresh tariff threats, and Moody’s downgraded U.S. debt.
Stocks fell, gold and Bitcoin surged, and volatility returned amid mixed earnings and policy surprises.
Read full blog post:
https://synapsetrading.com/?p=49622
Last week, U.S. equities wrapped up a strong May with the S&P 500 gaining 6.2%, Nasdaq up 9.6%, and Dow rising 3.9%, marking the best monthly performance since 2023. This rally was driven by strong earnings in the tech sector and cooling inflation expectations. Hedge funds ramped up stock purchases, especially in AI-related names, while U.S. Treasury yields dropped as investors sought safety amid global uncertainty.
Globally, U.S.-China trade tensions resurfaced as new American tariffs prompted retaliation concerns, causing the U.S. dollar to weaken and the British pound to surge. Meanwhile, oil prices jumped over 4% on OPEC+ decisions and geopolitical risks. Despite the positive momentum in equities, the underlying mood remains cautious due to macro headwinds and shifting interest rate expectations.
Gold and Palantir are 2 important counters I'm watching this week, and will continue to buy more.
Globally, U.S.-China trade tensions resurfaced as new American tariffs prompted retaliation concerns, causing the U.S. dollar to weaken and the British pound to surge. Meanwhile, oil prices jumped over 4% on OPEC+ decisions and geopolitical risks. Despite the positive momentum in equities, the underlying mood remains cautious due to macro headwinds and shifting interest rate expectations.
Gold and Palantir are 2 important counters I'm watching this week, and will continue to buy more.
Forwarded from Spencer Li
🧠 Market Overview & Technicals
S&P 500 is consolidating above key moving averages, considered constructive technically.
The market is not showing a bull trap scenario (e.g. like March 2022); instead, it is digesting gains, allowing for a possible uptrend resumption.
Volatility has cooled, leading to more trading opportunities, but the portfolio is not 100% long due to mixed signals.
Historical comparison: The current setup is somewhat similar to mid-2019 or 1998, with rising concerns but still a trending market.
⚠️ Cautionary Signals
Homebuilders sector is underperforming significantly. This is a red flag and could signal trouble ahead.
If homebuilders prove correct, the market could correct, and high-beta positions may be stopped out.
We are still in a choppy market, not a stable, low-volatility environment.
🧭 Contrarian Bullish Indicators
CEO confidence is very low, which historically coincides with market bottoms (e.g., 2009, 2020, 2019, late 2022).
Fund managers are underweight equities, a setup that historically precedes market rallies.
Low sentiment combined with positive technicals creates a bullish bias.
💵 Dollar, Gold & Silver Outlook
Dollar weakness is a key theme and is expected to continue, which supports risk assets like stocks and metals.
Silver has lagged behind gold significantly but is now breaking out with a technical cup-and-handle pattern. A long trade was initiated.
Gold remains strong, showing sustained uptrend and breakouts.
Gold-to-silver ratio is important. If it declines, it signals a risk-on environment and potential equity rally.
📊 Market Sentiment & Positioning
Since Oct 2024, the S&P 500 has been flat, even as earnings have grown. This suggests markets may be climbing a wall of worry.
Many investors are underexposed. Upside could come as sentiment shifts and institutional funds reallocate.
Retail investors and even fund managers typically underperform benchmarks. Any gains are beating the average.
🧩 Core Message
Despite bad news and economic concerns, constructive technicals, low sentiment, and historical parallels support a potential bull move, but traders must stay risk-aware due to underperformance in key sectors like homebuilders.
S&P 500 is consolidating above key moving averages, considered constructive technically.
The market is not showing a bull trap scenario (e.g. like March 2022); instead, it is digesting gains, allowing for a possible uptrend resumption.
Volatility has cooled, leading to more trading opportunities, but the portfolio is not 100% long due to mixed signals.
Historical comparison: The current setup is somewhat similar to mid-2019 or 1998, with rising concerns but still a trending market.
⚠️ Cautionary Signals
Homebuilders sector is underperforming significantly. This is a red flag and could signal trouble ahead.
If homebuilders prove correct, the market could correct, and high-beta positions may be stopped out.
We are still in a choppy market, not a stable, low-volatility environment.
🧭 Contrarian Bullish Indicators
CEO confidence is very low, which historically coincides with market bottoms (e.g., 2009, 2020, 2019, late 2022).
Fund managers are underweight equities, a setup that historically precedes market rallies.
Low sentiment combined with positive technicals creates a bullish bias.
💵 Dollar, Gold & Silver Outlook
Dollar weakness is a key theme and is expected to continue, which supports risk assets like stocks and metals.
Silver has lagged behind gold significantly but is now breaking out with a technical cup-and-handle pattern. A long trade was initiated.
Gold remains strong, showing sustained uptrend and breakouts.
Gold-to-silver ratio is important. If it declines, it signals a risk-on environment and potential equity rally.
📊 Market Sentiment & Positioning
Since Oct 2024, the S&P 500 has been flat, even as earnings have grown. This suggests markets may be climbing a wall of worry.
Many investors are underexposed. Upside could come as sentiment shifts and institutional funds reallocate.
Retail investors and even fund managers typically underperform benchmarks. Any gains are beating the average.
🧩 Core Message
Despite bad news and economic concerns, constructive technicals, low sentiment, and historical parallels support a potential bull move, but traders must stay risk-aware due to underperformance in key sectors like homebuilders.
Forwarded from Spencer Li
📈 Market Overview
- S&P 500 has hit 6,000 and continues to grind higher, surprising many investors. Volatility remains low, supporting this upward trend.
- Gold-to-Silver Ratio is declining sharply, historically a risk-on signal, indicating investors are favoring risk assets like equities.
- Multiple strong breakouts observed across varies sectors, confirming a healthy breadth in the rally.
🪙 Gold/Silver Ratio as a Signal
- Gold = safe haven, Silver = risk-on metal.
- A sharp drop in gold/silver ratio often precedes strong equity rallies.
- Historical drops in this ratio (e.g., 2019, post-COVID 2020, March 2023) aligned with major rallies.
- Current plunge in the ratio suggests increased risk-taking, supportive of continued market strength.
💰 Earnings Revisions & Macro Indicators
- Upward earnings revisions are now emerging, a key driver of sustainable market rallies.
- This contrasts with the 2023–24 rally, which was largely valuation-driven.
- ISM PMIs (manufacturing) and copper prices are rising, supporting the idea of a cyclical economic pickup.
- A weaker USD is aiding corporate earnings and pushing equity indices higher when priced in other currencies (e.g., euro).
📉 Dollar & International View
- The US dollar remains weak but stable. A continued drop would boost US stocks and earnings further.
- S&P 500 in euro terms is still below 2024 highs, showing how much of the rally is dollar-weakness driven.
🔚 Conclusion
- The current rally is broadly supported by technical breakouts, improving fundamentals (earnings), macro tailwinds (copper, PMIs, weak USD), and investor risk appetite.
- While uncertainty remains, the weight of the evidence supports a risk-on stance for now.
- S&P 500 has hit 6,000 and continues to grind higher, surprising many investors. Volatility remains low, supporting this upward trend.
- Gold-to-Silver Ratio is declining sharply, historically a risk-on signal, indicating investors are favoring risk assets like equities.
- Multiple strong breakouts observed across varies sectors, confirming a healthy breadth in the rally.
🪙 Gold/Silver Ratio as a Signal
- Gold = safe haven, Silver = risk-on metal.
- A sharp drop in gold/silver ratio often precedes strong equity rallies.
- Historical drops in this ratio (e.g., 2019, post-COVID 2020, March 2023) aligned with major rallies.
- Current plunge in the ratio suggests increased risk-taking, supportive of continued market strength.
💰 Earnings Revisions & Macro Indicators
- Upward earnings revisions are now emerging, a key driver of sustainable market rallies.
- This contrasts with the 2023–24 rally, which was largely valuation-driven.
- ISM PMIs (manufacturing) and copper prices are rising, supporting the idea of a cyclical economic pickup.
- A weaker USD is aiding corporate earnings and pushing equity indices higher when priced in other currencies (e.g., euro).
📉 Dollar & International View
- The US dollar remains weak but stable. A continued drop would boost US stocks and earnings further.
- S&P 500 in euro terms is still below 2024 highs, showing how much of the rally is dollar-weakness driven.
🔚 Conclusion
- The current rally is broadly supported by technical breakouts, improving fundamentals (earnings), macro tailwinds (copper, PMIs, weak USD), and investor risk appetite.
- While uncertainty remains, the weight of the evidence supports a risk-on stance for now.
Forwarded from Spencer Li
🧭 What Just Happened
June 21–22: The U.S., in coordination with Israel, launched precision airstrikes on three Iranian nuclear facilities—Fordow, Natanz, and Isfahan—using B‑2 bombers, Tomahawk cruise missiles, and bunker-busters.
Trump’s justification: Prevent Iran from obtaining a nuclear weapon and respond to escalating Israeli–Iranian conflict.
Political response: Bypass of Congress, heavy domestic criticism, and concern about U.S. returning to Middle East wars.
📜 Historical Context
1979 Iranian Revolution & Hostage Crisis
U.S.–Iran relations collapsed after the Shah was deposed and U.S. embassy staff were held captive for 444 days, beginning in 1979 .
1953 Coup & Pahlavi Era
The 1953 CIA‑MI6 coup overthrew PM Mosaddegh, installing the Shah—a catalyst for future revolution.
Cold War and Nuclear tensions
U.S. backing of the Shah continued until 1979; nuclear proliferation fears have driven sanctions, covert actions, and military standoffs ever since.
Recurring Gulf clashes Skirmishes in the 1980s (e.g., tanker wars, Operation Earnest Will) and 2010s Strait of Hormuz crises set precedents for asymmetric conflict.
Trump era rupture
U.S. withdrawal from the 2015 nuclear deal in 2018, reimposition of sanctions, and heightening proxy struggles across the region.
🔁 What Led to the Strikes
Israeli pre-emptive strikes (June 13) targeted Iran’s nuclear infrastructure and prompted Iranian missile and drone retaliation.
U.S. viewed Israeli moves as weakening Iran’s air defenses, prompting coordinated action.
Failed diplomacy: With nuclear talks stalled, and U.S. aligning with Israel and some Republicans, the U.S. took military action as a strategic pivot.
June 21–22: The U.S., in coordination with Israel, launched precision airstrikes on three Iranian nuclear facilities—Fordow, Natanz, and Isfahan—using B‑2 bombers, Tomahawk cruise missiles, and bunker-busters.
Trump’s justification: Prevent Iran from obtaining a nuclear weapon and respond to escalating Israeli–Iranian conflict.
Political response: Bypass of Congress, heavy domestic criticism, and concern about U.S. returning to Middle East wars.
📜 Historical Context
1979 Iranian Revolution & Hostage Crisis
U.S.–Iran relations collapsed after the Shah was deposed and U.S. embassy staff were held captive for 444 days, beginning in 1979 .
1953 Coup & Pahlavi Era
The 1953 CIA‑MI6 coup overthrew PM Mosaddegh, installing the Shah—a catalyst for future revolution.
Cold War and Nuclear tensions
U.S. backing of the Shah continued until 1979; nuclear proliferation fears have driven sanctions, covert actions, and military standoffs ever since.
Recurring Gulf clashes Skirmishes in the 1980s (e.g., tanker wars, Operation Earnest Will) and 2010s Strait of Hormuz crises set precedents for asymmetric conflict.
Trump era rupture
U.S. withdrawal from the 2015 nuclear deal in 2018, reimposition of sanctions, and heightening proxy struggles across the region.
🔁 What Led to the Strikes
Israeli pre-emptive strikes (June 13) targeted Iran’s nuclear infrastructure and prompted Iranian missile and drone retaliation.
U.S. viewed Israeli moves as weakening Iran’s air defenses, prompting coordinated action.
Failed diplomacy: With nuclear talks stalled, and U.S. aligning with Israel and some Republicans, the U.S. took military action as a strategic pivot.
Forwarded from Spencer Li
📈 Immediate Market Impact
Oil
Price spike expected on concerns over Strait of Hormuz disruption (~20M bpd transit).
Risk premium likely, but long-term impacts may be tempered by OPEC+ response.
Safe-havens
Gold, U.S. Treasuries, USD: Near-term surge as investors seek stability.
Cryptocurrencies
Bitcoin fell ~1%; Ether dropped over 5%—reflecting risk sentiment.
Equities
Short-term volatility expected.
If the strike is contained, equities might bounce as oil shock fades and risk premiums contract
🌊 Second & Third‑Order Effects
Inflation risk
Higher oil → elevated input costs → broader inflation, potential central bank tightening.
Global growth slowdown
Oil-dependent economies, especially in Asia (e.g., China, India, S. Korea), may feel drag.
Currency and debt effects
USD strength could pressure EM currencies and raise borrowing costs.
U.S. Treasuries become even more attractive safe-haven inflows.
Regional escalation risk
Iranian retaliation might involve proxies across the Gulf, raising risks to insurance, shipping, and oil logistics.
Risk premiums in energy, insurance, shipping, and defense sectors could rise.
Geopolitical ripple
U.S. stance sends signals to China and Russia regarding U.S. strategic commitment, with potential spillovers in Taiwan and Ukraine dynamics .
Political ramifications
Domestic constraints on war powers may shape markets as investors factor in potential legislative backlash.
Public and internal U.S. political tension could yield unexpected policy volatility.
✅ Key Takeaway
This marks a major escalation point in U.S.–Iran relations, with broad historical precedent. Markets are currently reacting via a risk-off tilt, especially in energy and safe-havens. Oil, gold, USD, and U.S.
Treasuries are the immediate beneficiaries, while equities, EM currencies, and crypto face near-term pressure.
Long-term outcomes hinge critically on the duration of Iran’s response and regional escalation pathways.
Oil
Price spike expected on concerns over Strait of Hormuz disruption (~20M bpd transit).
Risk premium likely, but long-term impacts may be tempered by OPEC+ response.
Safe-havens
Gold, U.S. Treasuries, USD: Near-term surge as investors seek stability.
Cryptocurrencies
Bitcoin fell ~1%; Ether dropped over 5%—reflecting risk sentiment.
Equities
Short-term volatility expected.
If the strike is contained, equities might bounce as oil shock fades and risk premiums contract
🌊 Second & Third‑Order Effects
Inflation risk
Higher oil → elevated input costs → broader inflation, potential central bank tightening.
Global growth slowdown
Oil-dependent economies, especially in Asia (e.g., China, India, S. Korea), may feel drag.
Currency and debt effects
USD strength could pressure EM currencies and raise borrowing costs.
U.S. Treasuries become even more attractive safe-haven inflows.
Regional escalation risk
Iranian retaliation might involve proxies across the Gulf, raising risks to insurance, shipping, and oil logistics.
Risk premiums in energy, insurance, shipping, and defense sectors could rise.
Geopolitical ripple
U.S. stance sends signals to China and Russia regarding U.S. strategic commitment, with potential spillovers in Taiwan and Ukraine dynamics .
Political ramifications
Domestic constraints on war powers may shape markets as investors factor in potential legislative backlash.
Public and internal U.S. political tension could yield unexpected policy volatility.
✅ Key Takeaway
This marks a major escalation point in U.S.–Iran relations, with broad historical precedent. Markets are currently reacting via a risk-off tilt, especially in energy and safe-havens. Oil, gold, USD, and U.S.
Treasuries are the immediate beneficiaries, while equities, EM currencies, and crypto face near-term pressure.
Long-term outcomes hinge critically on the duration of Iran’s response and regional escalation pathways.