https://t.co/bNbEKxTdWw 【Sakioka & Hiroko’s U.S. Stocks & Options TV #78】How Long Until the S&P 500 Enters a Downtrend? (Ryosuke Okazaki × Hiroko Ohashi) Understood! Investment Seminar #AISummary Thorough Analysis of U.S. Midterm Elections, AI Stock Plunge, and S&P 500 Downside Risk 🔳 Possibility of Democratic Victory in U.S. Midterm Elections It was noted that the Democratic Party has a high likelihood of winning control of both chambers in the November 4 U.S. midterm elections. Historical precedent exists for a Democratic-controlled Congress under a Republican president; attention is now focused on whether this election’s seat losses will reach historic proportions. 🔳 Impact of Midterm Elections on AI Investments It was warned that if the Democratic Party expands its influence in Congress and local politics, regulatory pressure on AI data center construction could intensify, backed by public opposition movements—potentially affecting massive capital expenditure plans by Meta, Amazon, and others. 🔳 Shift in Global Bond Markets While equities in the U.S. and South Korea are being sold, government bonds are being bought, driving yields lower. South Korea’s 10-year bond yield has fallen sharply. In contrast, French government bonds continue to face selling pressure, showing divergent behavior from other markets. 🔳 Expectations for Further U.S. Rate Hikes Fade The U.S. 2-year Treasury yield has declined to 4.635%. Market expectations for additional rate hikes have been reduced from 4–5 to approximately 3–4 hikes. Future monetary policy may increasingly depend on equity market performance and economic trends. 🔳 SOX Index Plunge and Weakness in Semiconductor Stocks The SOX index has fallen approximately 29% from its June 22 high, rebounded about 23%, then dropped again by roughly 20%. Repeated sharp declines in a short period have raised concerns that a break below recent lows could trigger deeper losses. 🔳 Strong Earnings but Falling Stock Prices Among AI-Linked Companies It was noted that even with strong earnings, AI-linked companies’ stock prices do not necessarily rise. Stock prices are influenced not only by fundamentals but also by market liquidity and capital supply-demand dynamics, with concerns growing over massive capital expenditures absorbing liquidity. 🔳 Concerns Surrounding Major Tech Giants Meta faces concerns over AI investment burdens and declining stock prices; Google is under scrutiny for potential negative impacts on its search business due to the proliferation of generative AI; Amazon is closely watched for its data center investments and cash flow. Investor sentiment toward AI-linked companies as a whole may deteriorate further. 🔳 S&P 500 on the Brink of Entering a Downtrend Even as the SOX index fell nearly 30% from its peak, the S&P 500 declined only about 3.5%. However, if semiconductor stock declines spread across the broader market, the S&P 500 could enter a full-scale correction phase. 🔳 Key Price Levels for the S&P 500 The S&P 500 is currently near 7,568; the options market is pricing in potential declines toward 7,500. Conversely, a recovery above 7,700 could signal a return to an uptrend—making this level a critical benchmark for future price movements. 🔳 Rising VIX Index and Growing Market Caution The VIX index has risen above 20, signaling heightened market anxiety. Put options on the S&P 500 have also increased, indicating investors are strengthening their hedges against potential price declines. 🔳 Similarities to the 2000 Dot-Com Bubble Burst During the 2000 dot-com crash, the SOX index plunged sharply while the S&P 500 remained near its highs for about four months before broader market weakness followed. With approximately four months having passed since June 22, a similar timeline is being observed this time. 恶化資金調達環境在2000年IT泡沫破裂時的發生 In 2000, falling prices of semiconductor and growth stocks triggered tighter funding conditions for startups, with problems spreading from small firms to large corporations. Issues emerged in intercorporate transactions and financial markets before consumers felt economic pain; even the Fed’s rate cuts in 2001 failed to prevent recession. 🔳 Risks to Watch Amid Current Price Declines If political turmoil from the midterm elections coincides with slowing AI data center investments, semiconductor declines could spread to the broader S&P 500. While a 20% plunge is not currently anticipated, a correction of around 10% remains entirely plausible. 🔳 Failed Options Trades and Investment Misjudgments Call options positioned on rising VIX expired on October 21 without materializing gains; additional losses occurred on calls for Amazon and others. The decision to shift positions toward upside expectations despite anticipating market declines backfired. 🔳 Taking Breaks During Downturns Is a Vital Investment Strategy Even seasoned investors can suffer impaired judgment due to physical or mental fatigue. When market perception falters, it is crucial not to force trades but to step back, rest, and regain clarity. 🔳 Future Investment Strategy and Key WatchpointsFollowing the midterm election results, focus will be on corporate capital expenditures in AI-related companies, the continued decline of the SOX index, and the battle around the 7,500 level of the S&P 500. It was noted that in periods of high volatility, it is important to avoid rushing into new trades and instead wait for clear investment opportunities to emerge.