Yesterday, US stocks experienced a strong rebound, with the Dow Jones, Nasdaq, and S&P 500 indices all rising, each by more than 2.5%.

Bitcoin is also rising alongside US stocks, reaching a peak of $94,000.

The VIX panic index has temporarily fallen below 30, and market sentiment is warming up.

But it should be noted that the current market fundamentals do not have obvious benefits, and the policy environment is almost the same as when it plummeted the day before yesterday.

This indicates that investors' attention to the dispute between Trump and Federal Reserve Chairman Powell is declining, and the market is more driven by sentiment.

So what is the reason for this sudden surge?

Last night, the market surged, primarily because Trump's team made three 'easing' statements, boosting market confidence.

1, Around 12:00 AM: Bessent, a core member of Trump's team, stated at a closed-door meeting with JPMorgan investors that the current US-China tension is unsustainable and will soon 'cool down.' This statement eased market concerns about the trade war, leading to a surge in Chinese concept stocks, a slight drop in gold, and the Nasdaq index began to rise.

2, Around 1 AM: Politico reported that US-China trade negotiations could last for months. White House Press Secretary Levitt later stated at a press conference that Trump is paving the way for a US-China trade agreement, and US-China relations are developing in a positive direction. At the same time, Levitt backed Trump’s criticisms of Powell, stating that Trump has the right to express dissatisfaction with the Federal Reserve and believes some of the Fed's actions have political motivations.

3, 5 AM: Trump personally spoke, stating that the US tariffs on China will be significantly reduced from the current level of 145%. Although it will not drop to zero, China will be very satisfied with the final tax rate. He also expressed no intention to fire Powell, but hopes Powell will be more proactive on interest rate cuts.

These three statements were layered and effectively eased market panic over the trade war and policy uncertainty, driving up risk assets such as US stocks and Bitcoin.

Currently, Trump's team is still advancing negotiations, and the market has expectations for a new trade agreement, with sensitivity to tariff fluctuations decreasing. Short-term sentiment recovery has become the main driving force for the rise.

However, the current market trend almost completely depends on Trump's whims, and there has been no essential change in the fundamentals.

The day before yesterday, he created negative sentiment through tariff threats and criticism of Powell. Yesterday, he boosted the market with easing statements. Tomorrow, he may throw out new moves to influence the market.

So rather than guessing Trump's next move, it is better to focus on market momentum.

Whether up or down, once momentum is exhausted, the market often moves in the opposite direction, as capital will always flow to more favorable places.

Is this market a rebound or a reversal?

From the current economic and political situation, it looks more like a sentiment recovery rebound after overselling, suggesting that it is a bit early to talk about a trend reversal.

The reason is that the rise and fall are still dominated by Trump's policy signals, and there are no substantial benefits in the economic fundamentals.

From the perspective of volume, this rise is a shrinking rebound, with trading volume moderately increasing, capital inflow not obvious, and lacking the momentum for a trend reversal.


A real reversal is usually accompanied by a sustained increase in trading volume, significant capital inflow, and major favorable policies or fundamentals. For example, if the Federal Reserve eases or economic data exceeds expectations.

Therefore, the GDP data to be announced at the end of the month will be crucial. If the data performs strongly, the market may rise further. Conversely, the upward momentum may quickly fade.

Before the fundamentals are clear, any rise should be viewed as a rebound, especially when there is a shrinking increase.

We need to learn to 'buy in panic, sell in rallies.' A significant rebound after a sharp decline is often a good opportunity to reduce positions in batches.