The three major US stock indices retreated from their intraday highs that day. The S&P 500 Index closed down 0.38%, while the Philadelphia Semiconductor Index fell by 2.7%. Chip stocks such as Intel and AMD pulled back after previous sharp gains, although $NVIDIA (NVDA.US)$and$Microsoft (MSFT.US)$ certain stocks still rose against the trend, indicating that capital continues to focus on trading around AI leaders.

More notably, although semiconductors experienced a short-term pullback, their prior gains had been substantial. $PHLX Semiconductor Index (.SOX.US)$ This quarter, the index has still risen approximately 47% cumulatively. This indicates that the current market has transitioned from a broad-based rally to a phase where key themes remain strong, volatility has intensified, and selecting appropriate investment tools is crucial.

For investors currently focused on US stock investment opportunities, instead of initially agonizing over which individual stock to buy, it may be better to first understand the main US equity trends through ETFs.

1. Core Broad-Based US Equity ETFs: Start with the overall market

If you are still uncertain about which sector to focus on, you can start with core broad-based US equity ETFs:

SPY leans more toward the overall core assets of US equities and covers a wider range of industries, while QQQ focuses more on technology growth, with holdings concentrated in large technology firms, AI, cloud computing, consumer electronics, and related sectors.

For investors new to the market, the advantage of broad-based ETFs is that there is no need to determine which company will definitely outperform; instead, one can first participate in the overall trend of the US equity market and its technology growth segment.

2. AI Technology Focus: Consider large-cap tech companies or tech ETFs.

The most central theme in the current U.S. stock market remains AI commercialization, tech giant performance, and capital expenditure. Areas of interest include:

XLK and VGT primarily cover large-cap technology and IT leaders, making them suitable for users interested in AI, cloud computing, software, and hardware ecosystems.

If you are interested in how AI computing power impacts the memory supply chain, you can also consider: $Roundhill Memory ETF (DRAM.US)$ As demand for AI servers, data centers, and high-performance computing rises, areas such as memory chips, HBM, flash storage, and hard drives have become recent market focal points.

For users new to U.S. stocks, tech ETFs are easier to navigate compared to individual stocks: they allow participation in AI-related themes through a diversified basket of assets, reducing the risk associated with single-company earnings volatility.

3. Semiconductor ETFs: High elasticity but accompanied by high volatility

If you are optimistic about sectors like AI computing power, GPUs, data centers, and semiconductor equipment, you can focus on:

These ETFs directly capture opportunities in AI hardware, GPUs, chip manufacturing, equipment, and the broader semiconductor industry.

However, it is important to note that semiconductor ETFs exhibit higher elasticity and more pronounced fluctuations. While they may rise faster during bullish trends, they could also decline more sharply during market corrections.

On May 7, SMH fell by approximately 1.78%, and SOXX dropped by about 2.86%, showing significantly higher volatility compared to broad-based ETFs like SPY and QQQ. Therefore, semiconductor ETFs are more suitable as ‘aggressive positions’ for observation and are not ideal for new investors to buy heavily at the outset.

4. Software and Cybersecurity: AI Application Areas Are Worth Noting

In addition to chips and hardware, software, cloud computing, and cybersecurity are also sectors that have recently attracted capital attention.

On May 7, Datadog surged due to an upward revision of its full-year guidance, while cybersecurity stocks such as CrowdStrike and Palo Alto Networks performed strongly, indicating that capital is seeking opportunities in AI applications, cloud monitoring, enterprise software, and security services.

Consider focusing on:

This type of ETF leans more towards AI applications, cloud services, and enterprise IT expenditure, making it suitable for users interested in observing how AI transitions from ‘computational hardware’ to ‘application implementation.’

5. Leveraged ETFs for Popular Stocks: Higher Volatility, Suitable for Small-Scale Observation

If you are already familiar with certain popular technology stocks, you may also consider corresponding leveraged single-stock ETFs. These ETFs are typically designed around a single high-profile stock, such as NVIDIA, Tesla, Apple, Amazon, or AMD. Compared to regular ETFs, their characteristics include greater volatility, shorter trading cycles, and suitability for short-term trading observations.

Areas worth considering include:

According to the Direxion official website, TSLL tracks 2x the daily performance of Tesla, while TSLS targets -1x the daily performance of Tesla; the GraniteShares official website shows that NVDL is a 2x leveraged NVIDIA ETF, and NVD is a 2x inverse NVIDIA ETF.

A special reminder: Leveraged single-stock ETFs are not suitable for long-term holding. These products typically aim for ‘daily gains or losses’ and are affected by factors such as leverage, daily rebalancing, and volatility decay. Losses will also be amplified if the market moves against expectations.

For new users, these ETFs are more suited for adding to a watchlist or observing with small amounts to familiarize themselves with the product’s volatility characteristics; it is not recommended to take large positions from the start.

6. Gold and Silver ETFs: Defensive Observation During Market Volatility

Recent geopolitical tensions, inflation expectations, and interest rate changes continue to affect markets. Safe-haven assets like gold and silver are attracting capital attention. The following can be considered:

For low-frequency traders, these ETFs may not necessarily serve as offensive tools but can act as a window to observe market risk appetite.

When the market is concerned about inflation, a weakening US dollar, or rising geopolitical risks, gold and silver tend to receive more attention. If US Treasury yields rise or the US dollar strengthens again, precious metals ETFs may also experience fluctuations.

7. If there are concerns about elevated market levels, inverse ETFs can also be observed.

If you believe that the current level of the U.S. stock market is relatively high and are concerned about a potential market pullback, you may also consider monitoring some inverse ETFs as observation tools. The following are worth attention:

The characteristics of these products are as follows: when the corresponding index declines, inverse ETFs typically rise, making them suitable for short-term hedging or observing downside market risks.

However, it is important to note that inverse ETFs, especially leveraged inverse ETFs, are not suitable for long-term holding. These products are affected by daily rebalancing, volatility decay, and amplified leverage, which can lead to faster losses if the directional judgment is incorrect.

Over the long term, the overall trend of the stock market tends to be upward. For users who are new to investing in the U.S. stock market, inverse ETFs are more suitable for expressing small, short-term views or hedging and are not recommended as long-term allocation tools.

Small Tips for Operations

Step one: Add to your watchlist first.
Add representative U.S. equity ETFs such as SPY, QQQ, XLK, VGT, SMH, SOXX, DRAM, and GLD to your watchlist and start by observing their trends.

Step Two: First, clarify the purpose.
Broad-based ETFs are suitable for observation as core holdings; technology, semiconductor, and storage ETFs lean more towards aggressive strategies; gold and silver ETFs are more defensive; inverse ETFs and leveraged individual stock ETFs are mainly used for short-term observation.

Step Three: Start with a small trial investment.
At the beginning, there is no need to invest heavily. You can start with a small amount to familiarize yourself with U.S. stock trading hours, pre-market and after-hours fluctuations, and changes in ETF prices.

Step Four: Participate in batches.
If you are optimistic about the long-term trend, you can use a phased buying approach to reduce the pressure of a short-term pullback after a lump-sum purchase.

Currently, there are still many opportunities in the U.S. stock market, but the market level is indeed not low, and short-term volatility is also increasing. For low-frequency users and new depositors, the key is to first understand the main trend and then choose the tools that suit them: the market fluctuates every day, but what truly matters is establishing your own framework for observation.
At this stage, it may be worthwhile to start with ETFs and gradually take the first step in participating in global asset allocation.

How to choose ETFs?Smart use of tools to select high-quality ETFs

Editor/Ray