Chinese Concepts Break Important Resistance Line, Technology Positions Are Extremely Crowded

The pursuit of tech stocks is intensifying across multiple dimensions. Chinese technology stocks began to accelerate upward on Thursday, with KWEB breaking through the long-term large downward trend line and recovering the 50-day moving average, with a single-day gain of 5%. The Market Ear had suggested earlier this week to capture the upward convexity through the KWEB call spread structure, and this logic is now being realized, advising investors to consider rolling to higher strike prices to continue amplifying the upward exposure.

Compared to global technology stocks, Chinese technology stocks still have a significant running-up space. If this round of breakthrough continues to accelerate, investors underweight in Chinese technology will face a greater passive chasing pressure.

The trading volume of the semiconductor leverage ETF SOXL also reached an extreme level. The daily trading volume is about 10 billion USD, corresponding to an underlying exposure of about 30 billion USD, and the retail investor's chasing emotions are clearly visible. Goldman Sachs' prime brokerage data shows that the proportion of long and net positions in the information technology sector in U.S. stock prime brokerage accounts is currently at the 100th and 99th percentiles of a five-year high, respectively.

The structural differentiation in the options market continues to intensify. Investors are frantically pursuing Nasdaq call options, pushing the spread between VXN and VIX further wider, which is extremely rare in historical terms. At the same time, the cost of downside protection is very cheap, both in terms of absolute volatility and skewness, and once the market turns, the exposed long positions will bear a significant impact.

Bond market volatility is also worth paying attention to. Against the backdrop of the continued rise in U.S. Treasury break-even inflation rates, whether the MOVE index can maintain a relatively low level is questionable, and the risk of divergence between bond volatility and interest rate trends is accumulating.