The biggest news yesterday was the market movement itself—the Nasdaq index plummeted by 1.4%.

This decline is worth high attention:

First, this is the second largest drop since the trade tariff turmoil in April, with a decline in one day that wiped out the gains made over nearly the past seven trading days. Nvidia plummeted by 3.5%, directly dragging down the market. Interestingly, there are actually more than 350 companies in the S&P 500 with rising stock prices, but they couldn't withstand the downward pressure from the 'seven giants', indicating that the rise of US stocks heavily depends on a few leading tech companies. It’s like a basketball game where the overall team performance is decent, but the core star suddenly underperforms, leading to a suppressed score.

From the daily chart, closing near the day's lowest point shows signs that the decline is not yet over. If this is not the beginning of a 'big trend', there are still many potential 'trap events' that could trigger real volatility at any time.

Second, from the perspective of market correlation, US Treasury bonds and the dollar are strengthening, and the market is starting to scramble to buy 'insurance'—this is consistent with the logic that 'risk assets are generally under pressure', as people are cutting their risk positions. Bitcoin and cryptocurrencies are also falling, proving that the market's mindset is: first seek safety, then think about the future (first sell, then see what happens).

It resembles the classic pattern of 2008: the first action investors take is to 'cut risk assets' and buy things that can ensure survival. This indicates that the market is 'de-leveraging' rather than simply experiencing emotional fluctuations. Because cryptocurrencies are often the assets with the strongest risk appetite, once funds even shy away from them, it indicates a real tightening of risk exposure.

Third, if it were the Dow Jones index that fell, it would be better, but this time the main character in the decline is the 'Nasdaq'. Wall Street is beginning to worry that this resembles the internet bubble of the 1990s; even Bloomberg's headline mentioned the word 'bubble' (Intel's valuation has soared to levels seen during the internet bubble). In the options market, some are buying 'catastrophic put options' to hedge tech stocks, fearing another wave of decline. The difference from 2000 is that US corporate earnings are still growing, and AI investments are being genuinely implemented. However, the similarity lies in the fact that the pace of valuation expansion far exceeds the pace at which earnings are realized.

Fourth, in the past month, the actual volatility of individual stocks in the Nasdaq has exceeded the index itself by 19 points, which is one of the most extreme situations in the past 15 years. The market is 'unrealistically quiet': while the index volatility is at a very low level, the volatility of individual stocks is soaring, which is a typical 'sign before an earthquake.'

Next, the market's fate is in Powell's hands. The market is currently pricing in too much 'dovishness' (a rate cut in September + another cut within the year), so the risk is that Powell may not be as dovish as expected—just a little cold water could trigger a shock. If he is merely ambiguous (neutral), the market might 'drop first and then recover', looking for the next piece of data (employment, inflation) for guidance.

This is not the storm itself, but the calm before the storm when the wind stops and the clouds gather.