Scott Rubner of Citadel Securities released an important report last week titled 'August: After the Reset', in which he stated that the biggest risks in the market previously came from overcrowding, high leverage, and concentration of funds, and that a more comprehensive 'technical reset' had already been completed in July. The market may still experience short-term fluctuations, but the medium-term bull market structure has not been disrupted, and the driving force of the market will gradually shift from positions and capital flows to profitability and fundamentals. The first thing to change is the behavior of individual investors. In May and June, the trading activity of individual investors in the United States was at a very high level, AI、 Semiconductors, storage, and software have become the most crowded directions. After entering July, retail investors began to significantly reduce their risks, and technology stocks even experienced consecutive days of net selling, with semiconductors and storage becoming the most concentrated areas of selling. More importantly, the typical "buy on dips" behavior of retail investors in the past has begun to change, and some stocks continue to be sold even if they rebound. This indicates that a large amount of floating chips accumulated in the early stage are being actively cleared. The second change is a decrease in leverage. The report observed that since the high point in June, the total asset size of leveraged ETFs has decreased by over $60 billion, with technology products falling by about 40% and semiconductor products falling by nearly 55%. At the same time, the weight of semiconductor companies in the S&P 500 has fallen from nearly 20% to about 16%, and the sector has experienced significant valuation and position compression internally. The tension in the financing market has also eased, reflecting that investors' demand for high leverage trading has significantly cooled down. Citadel also emphasized a special phenomenon in the current market: individual stocks and industries fluctuate greatly, but index volatility is relatively limited. In the past, when the SOX semiconductor index fell sharply, the S&P usually fell synchronously, but since 2026, the drastic adjustment of semiconductors has become increasingly localized, and other industries can play a buffering role. That is to say, the index appears calm on the surface, but in reality, it has undergone quite intense spinning and deleveraging internally. This differentiation means that market breadth is improving and risks are no longer highly concentrated on a few tech leaders. The fundamental factors truly support Citadel's mid-term bullish judgment. During the Q2 earnings season, the S&P 500 companies' profit expectations continued to be revised upwards, indicating that although the market had previously given high expectations, corporate profits could still exceed market judgments. At the same time, after adjustment, the valuation of technology stocks will significantly decline in the next 12 months, and the report believes that the valuation of the information technology sector has approached the lower level of the past year. The simultaneous upward revision of profits and compression of valuations have resulted in a healthier risk return structure in the current market compared to a few months ago. In addition, as the earnings season gradually comes to an end, more and more listed companies will re-enter the stock repurchase window. In July, many companies were in a quiet period for repurchases, and after entering August, this part of structured buying will reappear. Therefore, the market is facing a relatively favorable combination: retail investors reducing their positions, reducing leverage, easing crowding, while profits continue to grow and corporate buybacks restart. Citadel therefore believes that July did not end the bull market, but rather cleared the previously overcrowded positions. In the future, the market may experience less rapid rise driven by leverage and sentiment, and is more likely to enter a phase of low volatility, sustained rotation, and slow index upward movement. For investors, the next more important question will shift from 'where will the funds flow next' to 'which companies' profits can truly be realized'.