Market Analysis:
Friday night’s trading was impacted by two key factors: the U.S. non-farm payroll data and the joint U.S.-UK sanctions on Russia. These developments caused significant increases in energy and chemical sectors, while freight rates surged even more sharply, boosting iron ore prices and subsequently lifting the entire black commodity sector.

With the year-end approaching, steel inventories are generally low, and industry contradictions are minimal. After a prolonged downtrend, we believe this phase of decline is nearing its end, both in terms of duration and price range. As a result, the risk/reward of short positions is diminishing, making it a good time to “take profit on shorts.” Moving forward, we suggest timing the entry for long positions carefully, or alternatively, staying on the sidelines until after the New Year and then looking to short on rallies.

Outlook and Strategy:
I currently anticipate one more short-term downtrend over the next couple of days, after which the market will have a solid foundation for an upward move. Initiating a direct upward move now may be premature, but regardless of whether the market continues to decline, the cost-effectiveness of further shorting is diminishing.

  • Key Level to Watch: If the market breaks above 3290, we consider the downtrend to have ended, and the market will officially enter a rebound phase.
  • Weekly Trend: The broader trend remains downward. However, within this downtrend, we are seeing phase-based rebound movements. The anticipated rebound height could be around 200 points, which we can capitalize on in terms of timing.

We recommend maintaining a cautious approach and preparing to enter long positions after assessing the market’s short-term moves.

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