[Red Envelope] 4.8 Think Twice, Achieve More: Self-discipline in Prosperity, Self-healing in Adversity

I originally planned to rest this week, but yesterday the market directly triggered a buy signal in our system—so objectively we comply with the framework, not letting personal will get in the way. Keep returning to execution. In the end, yesterday we were basically bold enough to go in, and our stock-picking aesthetics weren’t bad either. Today, with 5,170 stocks rising and over 100 hitting the daily limit, when the index surged with volume surging, we could basically all have gains.[Taoguba]

Yesterday I shared with my classmates the low-buy trigger for “Huadian Liaoning Energy,” and it was triggered because of the arbitrage breakthrough from Jinyao Pharmaceutical. So today, the high-position “shoot-to-the-sky cannonball” is only suitable for front-running and profit-taking. Looking back now, it still safely followed the plan.

And today’s key points are actually the same critical signals we shared yesterday: “Micro-cap stocks, as the leading direction for the main selloff to stop and then rebound,” + “A breakdown signal appears in high-position holding-and-bonding.”
Last Friday, if you could read the breakdown signal in the high-position holding-and-bonding, then yesterday at the open you could read the micro-cap selloff stopping and repairing, plus power stocks finally repairing their oversold condition. So this week, the market is basically left to perform however it wants. Of course, what should ordinary traders do if they can’t read it? Wisdom isn’t as good as going along with it. The signals shared clearly and prominently—open my homepage and you’ll see them. If you missed it, that means you didn’t follow closely enough or didn’t pay attention at all. Today, Jinyao Pharmaceutical and Wanbangde rose on the day but actually still lost; meanwhile, for the fiber optics that continued to rally but other people kept missing the move, it’s very easy to end up like that. In reality, after looping around, quite a number of star retail-accounts traders and first-tier funds from the Dragon-Tiger List made money on the limit-up day but lost on emotional stocks—so there’s no need to be too discouraged. After all, yesterday’s signal was a breakthrough in sentiment; today the trend is a bipolar reversal, catching people off guard is easy. But what doesn’t change is that at too high a position, you have to learn to make trade-offs.

**So today’s market also produced a strange scene: both the index and volume surged hard; yet Jinyao Pharmaceutical and the sentiment names led by Farsunxing went through a wave of broad declines. Classic two theories: **
1. A slow bull isn’t a crazy bull. In slow-bull markets, sentiment and trend form a seesaw effect. Today, sentiment holding-and-bonding collapses, while the trend rises;
2. When the index expands volume and prints a big bullish day, funds are more inclined to consider capacity stocks’ breakeven and upside/downside ratio—thus they suck liquidity and dismantle the high-position holding-and-bonding;

So in my model system today, what do we do when the open has a “bid-for-repair”? Can the same theory we followed on the previous Tuesday—back when we watched Changfei Optic Fiber—be used again?

Wait patiently for the index disagreement, then look for the resonance theme that first flows back. And today, when the index opens with disagreement—everyone gaps up then sells off—after Jinyao Pharmaceutical and others dump, which theme came out first?

There are a total of three “computing, chips, and communications” categories.

So at the open today, you have to know that no matter how you go in, the only way to have intraday opportunity to make money is to focus on these three. Broadly speaking, it’s fine to classify it all as “technology with capacity.” There are many sub-categories: computing power, CPO, PCB, memory chips, liquid cooling, AI applications, and so on. In terms of pattern, it mainly focuses on oversold rebound and repair. If there’s disagreement ahead, we’ll still focus on that.

Second is the node issue. Today, we again see the second signal within the model: effective volume transfer from high positions to low positions

“High-low switching,” as they say, can truly begin now
And not like the move in Huadian Liaoning Energy, where doing rebound plays in Guangxi Energy was easy to get trapped in a continuous way. Because today there’s an extreme divergence in the data: on the highest board, Jinyao Pharmaceutical is basically quasi-limit-up (nearing “from almost no fall to limit-up in a turnaround,” i.e., behaving like a quasi day trading heaven/earth pattern), while on the second and third boards there’s only one lonely candidate; yet there are 122 stocks hitting the daily limit on the first board. Meanwhile, the resonance index also printed a big bullish day with volume. So the next logic is very clear: last Tuesday when the index bottomed out with a big bullish resonance, the names with that setup were Huadian Liaoning Energy and Changfei Optic Fiber. In our model, we gave attention to the second-first-board breakout concept back then. So today, the first-board movers should also be taken seriously. It could very well be the potential future highest board—or the potential new trend!

Alright—up to here, we’ve already thought through the open: volume expands and the index surges in resonance with technology, and intraday first-board opportunities in resonance. Sentiment is weak but the trend is strong. Now we know how to choose direction. Then all the predictive reasoning is built on the premise that “the index repair cannot be falsified.” If over the next three days the index breaks down the bullish K we saw today and thus falsifies it, then all the reasoning becomes meaningless. Even if you capture a bunch of rebound leaders, it becomes an A-kill of the dragon—liquidity traps after a pop, burying the people inside.

So we have to figure out whether the index repair has staying power—and how long it lasts.

First, volume is the basic foundation of a bull market. I’ve said this many times. And today’s incremental volume comes from the accumulation of off-market funds caused by the escalation of the situation around the U.S.-Iran developments before and around the Spring Festival. This year is one of the few years in nearly a decade without a seasonal spring rally. After a downturn, it got hit hard—from the 118 “space program” selloff that saw a wave of daily limit-down—down to today’s 4.8. When you see this, classmates in front of the screen will inevitably feel a bit sour:
“You~know~how~I’ve~gotten~through~these~past~few~months~!”

It was so intense, so brutal, and it lasted so long. Most retail investors almost lost their principal!
Next, let me tell everyone a good piece of news: objectively, from every instance of bottoming-out with volume expansion and repair, at least there is a three-day repair micro-cycle—meaning there’s no major risk from today until Friday. The first disagreement still focuses on opportunity.

From today’s order-book signals, there’s nothing that can be falsified. For example, the bottom at 3800 was tested multiple times without breaking; volume returned to 2.5T; and heavyweights are on stage supporting the table. Even including our previous index support level “3983” gap—today the index closed at 3995 and took a clear initiative to stand above it. The stance is very obvious. So this time, the index repair has staying power. You can feel more at ease going to core switching. But the only risk point is that the pace requirement is high!

Because yesterday there were 4,000-plus stocks rising. Today there are 5,170 rising and it achieves a second climax. If the index goes higher again, it will hit the integer level of 4000–4023 plus the 30-day line pressure. Technically, it has already arrived at a climax point. So tomorrow, if there’s an impulsive rally, even if other funds don’t sell with a “hold the line” mindset, quantitative trading will be the first to take profits at the first triple-climax—meaning, in theory, it’s the “front-run feast.” If you keep pushing the highs, it becomes easier for front-runners to smash and back-runners to bear the brunt. And whether you’re front-running or back-running, what you’re waiting for is the “first disagreement” to focus on!

If we want to benchmark whether the market index has had similar stages recently—has it?
Actually, after the second round of testing on 12.23–24, there was once a similar one. Including the 12.17 candle that, after a bottoming test, printed a volume-expanding big bullish resonance—technology stocks surged like Yizhongtian and others. At that time, on the sentiment side, commercial aerospace also had a wave of daily limit-downs, just like today’s Jinyao Pharmaceutical and Farsunxing.

Today is also the stage where weights like technology finance first set the table. Sentiment names lag and catch up with losses. But based on the thinking above: if it rises again tomorrow without increasing volume, then the triple-climax is likely to be cashed out. Also, the 30-day line at 4023 suppresses things. So next, the probability is actually higher that the market will range in the high zone before breaking out again. Therefore, theme sentiment cannot be ignored. Like on 12.17, when the index surged and commercial aerospace had a wave of daily limit-downs, the technology brought up was decent—but looking back, commercial aerospace was actually the real “yyds.” Only when the weights set the table can the themes sing well.

Also, this big incremental surge happened because the “shoe dropping” is settled in the near term. Then the ceasefire news benefits technology. If the situation escalates, it benefits chemicals and oil & gas too. Today after the ceasefire, it went one-way. Who knows whether in the future it could again turn out to be unreliable and somehow restart hostilities. Also, the medium-term targets of the second round of testing haven’t been achieved yet, so after repairing for a period, the possibility of another dip still exists.

In terms of direction

Technology
It’s hard to say about heroes and villains—basically it’s about timing and fate. Yesterday, the situation tightened and chemicals surged one step further and fully fed back. Today, after the ceasefire, technology also gave the same one-step completion feedback. So will it replay chemicals tomorrow? My answer is: by tomorrow, the climax won’t have increased expectations. There will definitely be disagreement, but it won’t be as bad as chemicals today. So the middle-and-back rows become the risk-concentrating area, where you can easily get lured into longs and then eliminated at a large scale. How do you distinguish middle/back row? When the index or a sector rises, it’s those that “freeze and don’t move” and don’t keep up—not those with larger gains than the theme’s “middle army.” So next, if the index keeps making consecutive bullish days and confirms the repair, try to look toward the front row. The front row has two points: (1) “Hard logic cannot be falsified.” For example, when we chose Huagong Technology at 3.4, the orders couldn’t be falsified. When we chose Demingli at 3.17, the memory chip price increases couldn’t be falsified. And when we chose Changfei Optic Fiber before the first board two Tuesdays ago, the price increase couldn’t be falsified as well. (2) “Intraday initiative is high enough.” For example, during the early session when everyone sold down, it was still moving upward or holding supported by moving averages. Or during the early session when everyone returned, it was also among the first to make a new high.

As for how to choose between hardware and applications? Consecutive limit boards and one-word boards both point to the hardware direction. Applications are similar to chemicals yesterday: oversold rotation brings it to a climax and leaves people confused. In reality, the pain point of these past few days has been this “mysterious rotation.” You have to use intraday guidance—like a one-word board, error correction, and so on—to determine it.

Healthcare/Pharma
Yesterday I warned about the risk of Jinyao Pharmaceutical cutting off its board and Wanbangde facing risk at a high position with a huge volume surge and panic-buying near the close. Today the risks were realized. But Minovo Nova is still propping up with a one-word board. Intraday pharma also still has some “alive room,” but it’s still the old problem we mentioned yesterday. If in the future some day the index surges, it’s highly unlikely to resonate with pharma’s safe-haven “old face.” So in the short term, the leadership is turning from an advance into a consolidation. If we need a label, I’ll give it an NPC setup. Next, whether the high-low switching expectation variance gets triggered matters: if Minovo Nova continues to build strength, and Jinyao Pharmaceutical holds high-position consolidation without failing to follow through on a further selloff, then we can look. If both are negative feedback, then in the short term it’s like the power “anti-nuke” on the previous Tuesday—ignore it.

Gold
The ceasefire is still pulling up as a hedge—this doesn’t make sense. If you must define it, it’s only oversold repair. If tomorrow it strengthens and the market goes that way, then who knows, gold could have “ghosts.” Pay attention to delayed entry points—normal with no persistence. Even if it does have persistence, it won’t be about A-shares trading futures; it’s not worth making excuses to chase a “dragon” by doing “it has a dragon.” So it may be more of a signal toward precious metals or rare earths. After all, the expectation of Trump visiting China has been fermenting: China Minmetals, Zhongxi, and Shenglong have all been continuously active.

Power
After oversold, it first falls then repairs—yesterday power officially repaired, laying the groundwork for today’s big jump. There is a sector limit-up effect intraday and you can continue to watch it. It’s just that the intraday initiative is not high. So if other directions get pushed too high and too unanimous, you can consider power’s expectation-variance rotation. And of course, if we think this way, gold is also an expectation-variance.

Finally, there’s been quite a lot of unusual moves in new listings recently—N Hong Board, C Huigu, TaiJin New Energy, Shenglong shares, and so on. It’s similar in spirit to what we just benchmarked with the 12.23 index. At that time, when weights set the table and the aerospace sector consolidated, new stocks like Naibaichuan and Tianshu Measurement were pulled up—so it also drew attention. That’s one of the sources of expectation variance.

Data classification:

Number of rising/falling stocks: 5174/301
Number of daily limit-up boards: Tuesday 93 / Wednesday 123
Daily limit-up completion rate: Tuesday 76% / Wednesday 86%
Number of daily limit-downs intraday: Tuesday 4 / Wednesday 4
Total market turnover: 2.45T, an increase of 827.22B compared to the previous trading day

This kind of breakdown and复盘+intraday sharing, fussing over classmates, is my unique approach. Elsewhere, you can’t see it. You can feel our classmates’ sincere effort—so have them just lift a hand to like and follow, and I’ll feel at ease too～
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