Don't be deceived by appearances! The continuous increase in the US stocks is not a reversal, investors should not blindly chase after higher prices.

On the surface, the U.S. stock market has been very strong in the past few weeks. However, upon closer observation, it is not difficult to see that despite continuous buying from investors, there has not been the frenzied enthusiasm one would expect before a true major rebound. As investors pinned their hopes on the ceasefire agreement between the U.S. and Iran holding, the S&P 500 index just achieved its best single-week gain since November last year. The index has risen for seven consecutive trading days, setting a record for the longest continuous rise since October last year when the index was in a historic uptrend. It is worth noting that the S&P 500 has seen gains of over 3% for two weeks in a row, the first time since 2022. However, internal market data shows that investors have not been chasing risks with overly optimistic sentiments as expected. Instead, companies with healthy balance sheets have outperformed those with weaker balance sheets, indicating that investors are adopting defensive strategies. Melissa Brown, Director of Investment Decision Research at Simcorp, stated, "Buying into companies with healthy balance sheets indicates that investors still have concerns and it reflects risk aversion. I would also like to point out that trading volume is far lower than the peak in late February, which means that this rally is happening under low trading volume - therefore, any individual buyer could have a greater impact on stock prices." After the weekend talks between the U.S. and Iran collapsed, President Trump threatened to block the Strait of Hormuz. As a result, market risk appetite reversed. Another sign of nervous investor sentiment is that the market rally has narrowed, with less than 40% of stocks outperforming the S&P 500 in the past five days, a situation typically seen in times of market pressure. Goldman Sachs data on institutional clients shows that investors clearly favor large tech and semiconductor stocks as the earnings season approaches, with these sectors being most bullish on fundamentals. Alexander Altmann, head of stocks strategy at Barclays Bank, said last Friday, "This week has been unusually lonely for the bulls." He added, "I've noticed there hasn't been a widespread 'risk-taking' action yet. Probably the best phrase I've heard recently is, 'I'll turn bullish when the ship starts sailing.'" Speculative stocks that usually benefit during stock market rallies have been excluded from this current uptrend. For example, Goldman Sachs' portfolio of unprofitable tech stocks saw drops or flat performance on five out of eight trading days in April. Jeffrey Young, head of investment strategy at PGIM Quantitative Solutions Group, stated, "Investors tend to choose quality stocks because there is still the risk of further shocks if the conflict escalates. Investors want to participate in the market, but given the deteriorating outlook, they tend to choose quality stocks." Meanwhile, the impact of the latest oil crisis on the U.S. economy is beginning to show. In recent weeks, U.S. consumer confidence has dropped to a historic low, a worrying sign. Additionally, the Consumer Price Index saw its largest monthly increase since 2022, indicating that inflation remains high. Overall, the current market situation is concerning due to the uncertainties brought about by the war. Investors are clearly reacting quickly to the latest developments, taking immediate action upon news. However, for truly long-term buying and selling signals, Wall Street needs a clearer understanding of Iran's next moves. Ohsung Kwon, Chief Stock Strategist at Fuku Securities, said, "A few weeks ago the market sentiment was very pessimistic, but now with more positive news, market sentiment has improved. However, it is difficult to accurately gauge market sentiment, especially in terms of positions. Our data shows that people have not really sold off core holdings, but have hedged instead." He added, "If the situation with Iran worsens further, leading to a deterioration in fundamentals, then I believe there may be greater selling pressure in the future."