[Guohai Asset Allocation] US Stocks SOX Surged, Not Suitable to Chase Highs; Short-Term Can Wait for Pullback

English summary

Conclusion: Since 2004, there have been 10 samples where SOX, after a 20% drawdown, had a single-day surge and had complete 60-day data. Among them, 3 times did not break the previous low and finally stood above the previous high; 2 times did not break the low but also failed to stand above the previous high; the other 5 times broke the previous low, of which 4 later re-stood above the surge day's close, and only 1 did not recover within 60 days. Overall, directly chasing highs after a surge is not advantageous; in the short term, it is better to wait for a pullback before looking for opportunities, while also paying attention to whether the previous low is lost. There is often still volatility in the days after a surge: the proportions of T+5, T+10, and T+60 achieving positive returns relative to the surge day's close are 40%, 50%, and 80%, respectively, with median returns of -5.0%, +1.2%, and +11.3%. In the short term, it may not rise all the way, but extended to 60 trading days, most samples can achieve positive returns. Breaking the low does not mean the end of the market: among the 5 samples that broke the previous low, 4 later re-stood above the surge day's close, and only the sample from March 2022 never recovered. …