2.26 Review: The index oscillation hides signs of divergence, with computing power taking over to lead the market trend

After a series of consecutive gains, the index shifted into a doji consolidation, and the widespread rally quietly faded. However, a trading volume of 2.5 trillion yuan, like a strong boost, announced that market enthusiasm remains, only the battlefield has shifted. Last night, Nvidia’s surprising earnings instantly ignited the previously dormant computing power sector, with PCB, gas turbines, and optical communications advancing simultaneously, and a surge of limit-ups sweeping through. The previously leading resource stocks in price hikes cooled off collectively, and the rotation of funds between high and low sectors is writing the prelude for the next phase of the market. This is not a retreat but a buildup and repositioning before a new surge. [Taoguba]

Following the Trend
The index remains volatile, showing strength, but the momentum has been weakening over three days. Data indicates a shift from broad gains to fewer winners and more losers, with the amount of limit-up stocks decreasing significantly. The index has also transitioned from a solid positive candle to a small doji in consolidation. Fortunately, trading volume remains solid, today reaching 2.5384 trillion yuan, an increase of 75.9 billion from yesterday, surpassing 2.5 trillion, and the market is expected to continue sideways within a range.

After two days of adjustment, the computing power sector has taken over the leadership from resource stocks, with a strong rotation upward, while resource stocks entered correction.
In the computing sector, after consecutive adjustments, there is an expectation of recovery. Additionally, Nvidia’s earnings beat expectations overnight, stimulating the sector. Although resource stocks opened high due to inertia, computing power stocks immediately rebounded after opening.
Throughout the day, 31 related concept stocks hit the limit-up, with a total of 66.225 billion yuan in limit-up gains, basically leading the market trend.
From the echelon perspective, the reorganization of Yunnan Energy Holdings, which weakly turned strong and advanced to 6 limit-ups, is a small breakthrough in height. Similarly, Fasheng, which sold assets and reached 4 limit-ups, is also notable. The remaining 29 stocks are all first-time limit-ups, but stocks like Shiliu Co., Tianrun Industrial, Shennan Circuit, and Tongding Interconnection repeatedly show signs of trend, indicating clear momentum.
From the subdivision perspective, today’s computing power gains mainly reflect three major directions: one is hardware, mainly PCB-related stocks, with 7 limit-ups totaling 21.404 billion yuan, all first-time; the second is AI energy, mainly gas turbines, with 6 limit-ups totaling 10.13 billion yuan; the third is optical communications, with 6 limit-ups totaling 15.368 billion yuan, including 4 limit-ups for Fasheng and 5 first-time limit-ups. Other areas include liquid cooling and data centers.
Behind the surge in computing power, internal rotation also exists. Previously resilient electronics stocks performed weaker today, indicating a correction. Companies like Honghe Technology and International Composite Materials showed weak performance.
Based on resource stocks mainly driven by price increases, today they mostly corrected across the board. In mineral resources, 17 stocks hit the limit-up, with only Zhangyuan Tungsten advancing to 2 limit-ups; the rest declined. In chemicals, 13 stocks hit the limit-up, with Jinzhengda and Chengxing Shares advancing to 3 limit-ups, the rest declined. The lithium battery sector, stimulated by overnight news, saw only 4 limit-ups and failed to generate a sector-wide effect.

Market Sentiment Fluctuations
While market sentiment remains strong, it shows signs of fatigue. The rebound of the index shifted from a main upward trend to consolidation, with both upward data and limit-up counts slowing significantly. If not for the strong contribution of computing stocks, the market might have appeared weaker.
Contrarily, speculative sentiment is recovering, lagging behind the market’s correction. Today, it continued to warm up, with the number of stocks hitting the limit-up in consecutive days reaching 6, ending a short-term decline. However, signs of rotation between high and low remain, and the probability of a direct main upward trend in the next phase is still low.

Tomorrow’s Outlook
Yesterday, from the perspective of repeated capital inflows and logical development, the focus was on finding opportunities in the computing power sector. Today, the sector rebounded as expected, but the internal structure has changed. The strength today was not in electronics but in PCB and gas turbines. Optical communications, though rebounding, was not as strong as PCB and turbines. Longfei, within optical communications, surged then fell back; Zhongtian Technology, at a relatively low position, performed better. Tongding and Hangdian Electric also showed strength, but Hangdian Electric failed to close the gap at the last moment, indicating that the sector is not actively attacking but rather rotating.
If this is the case, then tomorrow, from a thematic perspective, the computing power sector is likely to show differentiation. During this divergence, it’s uncertain whether resource sectors will continue to recover or if internal rotation within computing power will dominate. Based on the late trading activity of electronics stocks today, funds seem to prefer internal adjustments and recovery.
As for individual stocks, the focus remains on core holdings. Currently, the stability of pure sentiment is still weaker than the concentration of capital, so it’s better to focus on sectors with strong capital backing. Opportunities also exist in sentiment-driven sectors, but the difficulty will be much higher.

Trading Tips
Holdings: Jinzhengda remained unchanged after hitting a flat top; Runze was sold for a T+0; a new position was opened in Hangdian Shares, bought mid-session, but it was sold at the close—watch if it can be safely exited tomorrow.

Post-market holdings: Jinzhengda, Runze Technology, Hangdian Shares.

Data Summary

☑Disclaimer: The content of this article is for personal review only. Any opinions or stocks mentioned are for illustration purposes and do not constitute investment advice. Please do not blindly follow the trend; trading is at your own risk. Investment involves risks; please trade cautiously!**
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