Strategist who accurately predicted the upward trend of US stocks in the first half of the year: Don't buy on every dip, but don't expect a major decline.

HSBC's Chief Multi-Asset Strategist, Max Kettner, believes that although US stocks have fallen significantly from their July highs, it is not yet time to buy the dip. There are still some tests ahead, but further declines will present buying opportunities.

Specifically, Kettner believes that the US stock market still needs to overcome some key obstacles, such as the Jackson Hole Symposium, which is scheduled to begin this Thursday. Federal Reserve Chairman Jerome Powell is expected to speak at the event, and Kettner anticipates that this may trigger another downturn in US stocks. Although market sentiment and positioning have become more neutral in the past two weeks, it is not yet time to increase positions. Kettner does not expect the pullback in US stocks since July to result in "massive selling" as investors' positions are not high.

In January of this year, Kettner correctly predicted the rebound in the first half of the US stock market. He shifted to increasing stock holdings in February and has maintained a favorable view of risk assets since then.

David Kostin, Goldman Sachs' Chief US Equity Strategist, believes that if the US economy continues to show signs of a soft landing, the recent correction in US stocks will be short-lived, providing investors with an opportunity to increase their stock holdings. For example, hedge funds' leverage levels indicate their ability to increase positions, while the decrease in cash holdings by mutual funds suggests an increase in future potential demand.

Scott Chronert, an analyst at Citigroup, also believes that if the S&P 500 index can pull back to levels around the end of May and early June, i.e., 4200-4300 points, it would be a good buying opportunity and create an attractive re-entry point for long-term and tactical investors. On Monday, the S&P 500 index rebounded, closing at 4399 points. The recent low for the index was 4335 points, and the interim high last month was 4607 points.

There are many arguments in the market that the recent decline in US stocks is temporary. These include:

• Money market funds holding record levels of cash.
• The strong rebound of US stocks since the beginning of this year, which is a "bear market killer" in such a strong recovery from a bear market.
• Many buyers have missed this year's rebound and will take the opportunity to enter during the downturn.

This year, aided by the optimistic outlook for the Federal Reserve's aggressive rate hikes without affecting economic growth and the boost from artificial intelligence, US stocks have rebounded significantly. As of now, the peak of the US stock market occurred in July, around the time of the Federal Reserve's July meeting, with the S&P 500 index rising more than 20% and the Nasdaq 100 rising more than 45% at one point. However, since then, US stocks have experienced a significant decline due to the impact of second-quarter reports and surging US bond yields. The Nasdaq 100, which had the strongest momentum, has fallen for three consecutive weeks, but its year-to-date gain is still considerable.

The sharp rise in mid-July forced many hedge funds to abandon their short positions. According to the latest data released by the Commodity Futures Trading Commission on Friday, hedge funds and other large speculators' net short positions in S&P 500 index futures narrowed to the lowest level in 14 months. Wall Street Journal previously analyzed the important risk that the US stock market will face in the future - the rise in real yields. In the future, the Federal Reserve will further reduce its balance sheet, while the speed of US bond supply increases and foreign investors' demand for US bonds weakens, all of which will continue to drive up US bond yields. Especially in September and October, the issuance of US bonds will further increase, which may lead to greater market volatility. The significant increase in real yields may exert obvious pressure on asset valuation, and the future returns of these assets must be discounted at higher interest rates.