How the Rally Fooled (Almost) Everyone 🤡
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#StrongHands 🙌 #BOP 🚀 Nation Update ️️️️️️️️️️️️️️️️️️️❤️️
Hi, I’m Paul Mampilly.
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Paul: Don’t Be Fooled by the Recent Surge 📈
The recent surge in the S&P 500, Nasdaq 100, and tech giants like the Magnificent 7 might have you thinking that the U.S.-China trade war is over.
But if you ask me . . .
Not even close.
So why did markets soar last week?
I believe it came down to a mix of short covering, market misdirection, and good old-fashioned emotional investing.
Let’s unpack what really happened . . .
Why Did Markets Pop? 💥
Last week, the U.S. and China announced a 90-day pause in trade tensions — temporarily halting tariff escalations.
Currently, Chinese goods face a 30% tariff entering the U.S., while American goods face a 10% tariff entering China.
Investors interpreted this truce as a de-escalation, sparking a rally particularly in tech-heavy indices.
However, this surge was amplified by two key factors: short covering and retail investors’ fear of missing out (FOMO).
Short Covering Madness 🫨
Many hedge funds loaded up on short positions — betting on stock declines amid trade war fears.
Shorting involves:
Borrowing shares
Selling them at the current price
Aiming to buy them back at a lower price to pocket the difference
It’s essentially a loan from a broker, requiring sufficient account funds to stay in good standing.
But if stock prices rise, brokers demand more capital to maintain these positions.
After the truce announcement, shorted stocks rallied, forcing hedge funds to buy back shares to cover their positions.
This buying pressure allowed market makers to push prices higher, fueling a feedback loop.
Retail FOMO 🏃Strikes Again
Meanwhile, individual investors — driven by price momentum and FOMO — jumped into the rally.
Unlike institutional investors, who rely on information and evidence, retail investors often react emotionally to price surges.
Many mistook the rally as a sign that the trade war was ending, fueling further buying.
This dynamic — short covering with retail FOMO — created a market surge that overstated the truce’s significance.
In reality, the trade war’s just beginning.
The Trade War’s ⚔️ True State
The 90-day agreement is a temporary bandage, not a resolution.
It fails to address core U.S. concerns:
Chinese dumping of goods
Currency manipulation
Intellectual property theft
Neither country can claim victory in this round, but China’s position is formidable.
Forty years of outsourcing have made China an economic powerhouse, dominating the production of everything from clothing to smartphones to pharmaceuticals.
This has left the U.S. vulnerable, overly dependent on a strategic adversary with policies and values often at odds with its own.
This dependency isn’t a new revelation — it’s the result of decades of U.S. policy decisions.
Reversing it will require more than a few new factories.
It demands a fundamental overhaul of economic priorities and trade policies — a process that will take years, if not decades.
Welcome to the New Economic Era 🔄
Let’s be clear: The old bull market is over.
The days of low interest rates and easy globalization are behind us.
Last week’s rally may have misled some investors into thinking otherwise — but at ATG Digital, we know what’s really happening . . .
Evidence shows we’re entering a new era of economic disruption and opportunity.
The trade war exposed the risks of over-reliance on global supply chains, particularly those centered in China.
But it’s not all bad news.
As the world adapts, new investment opportunities will emerge in areas such as:
Domestic manufacturing
Technology resilience
Sectors less exposed to trade volatility
At ATG Digital, we’re already repositioning our portfolios for the chance to capitalize on this shift.
In future updates, I’ll share the policy changes we’re watching — and how we’re aligning our investments to seize these opportunities.
Bottom Line: ⚓ Focus on the Big Picture
Last week’s market rally was a short-term reaction to a temporary truce — driven by short covering and emotional trades.
The trade war is far from over, and its deeper issues remain unresolved.
Smart investors will look past the noise and focus on the long-term trends reshaping the global economy.
Want to see how we’re positioning for long-term disruption — and long-term future upside?
Click on the button below to learn how we invest when the old playbook stops working.
#OGI100: Monday, May 19, 2025
The #OGI100 is down 0.31% today.
Created on September 22, 2022, the #OGI100 is an index/portfolio comprised of opportunity, growth, innovation, and crypto-related investments.
Our goals with the #OGI100 are twofold . . .
First, we want readers to get a sense of what our investments are doing in the market, because they can sometimes perform very differently than traditional indices (like the S&P 500 or Nasdaq 100).
Second, we’d like to eventually turn the #OGI100 into an exchange-traded fund (ETF).
That way, instead of owning hundreds of growth stocks, you can get exposure to ATG Digital thinking — in opportunity, growth, innovation, and crypto — all in one place.
To learn more or to express your support for the launch of an ETF (by completing a poll), click here.
Tomorrow: Dan’s covering a stock in an emerging new bull market! 👀
Last week was a GREAT week for those who subscribe to our Platinum Tier model portfolio!
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Well done, Nathan!
This isn’t an easy market to score big wins — especially trading options.
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If you’re not an official ATG Digital member, consider joining today by clicking here.
On Monday, May 19, 2025, we hope to welcome you soon! 🤗
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Disclaimer/Legal Stuff Written in Plain English
What you read/watch/hear is OPINION, not financial/investment advice. Treat it no different than when you read/watch/hear your favorite author/YouTuber/podcaster. Despite our best efforts, we get things wrong and make mistakes. Investing is risky. There is no guarantee you will make money. Your investments may lose value. That’s RISK. Past performance is no guarantee of future results. Employees, contractors, and owners of ATG Digital, LLC own/trade/transact in the stocks, options, and crypto that are the subject of our trade alerts, updates, reports, and commentaries. We cannot give you personalized financial advice because we are NOT financial advisors. It’s on you to decide how much/when/what to buy/sell based on YOUR financial needs, plans, and risk preferences. There are no guarantees. Loss of your capital is an outcome that you should evaluate carefully with a financial advisor before you trade, speculate, or invest. It's your money and your responsibility.