Key Observations:

  1. Last Week’s Performance:
    • Rebar surged approximately 200 points, forming a strong bullish weekly candle.
    • Market sentiment has shifted, with many formerly bearish traders turning bullish. However, this reflects a potential “musical chairs” scenario—a classic market psychology trap.
  2. Commodity Trends:
    • Iron ore and coking coal: Strong rebounds, with futures shifting from discount to premium.
    • Technical and positional indicators are uniformly bullish, signaling potential for further upside. Large corrections before the New Year are unlikely.
  3. Policy and Macro Signals:
    • Domestic: Regional economic targets of 5% GDP growth or higher for 2025 indicate continued policy support. Additional RRR and interest rate cuts are anticipated this week, further boosting liquidity.
    • Global: Positive signals from recent U.S.-China communication reinforce expectations of strong economic stimulus in 2025.

Strategic Insights:

Market Overview:

  • The current market appears orchestrated by major players, aiming to shift sentiment and lure in retail investors:
    1. Initial rally disrupts bearish expectations, creating regret and FOMO among sidelined traders.
    2. Subsequent pullback entices cautious buyers, only to set the stage for a post-holiday bear trap.

Action Plan:

  • Long Positions: Continue holding and managing existing longs, targeting near-term gains during this rally.
  • Spread Trades: Gradually build spread positions to capture mispricing opportunities.
  • Risk Management: Be prepared for potential post-holiday shocks and avoid chasing late-stage market momentum.

This is a time to remain vigilant. While bullish momentum prevails in the short term, market traps often spring when least expected.

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