March 24 Review -

1. Index Projection [Taogu Ba]

2. Index Direction

Yesterday, I mentioned in the review that the index + sentiment reached three ice points, and the index is around 3800, near the previous “phase double bottom.” It’s like a spring compressed to the extreme, ready to release in the short term. Coupled with external market surges and multiple resonances, today’s oversold rebound was expected. However, we also said that during this round of continuous decline, most stocks have broken below support and become scattered. It’s like riding a bike and falling off—you get scraped; crashing into a motorcycle results in a fracture; into a car causes a concussion. The speed of recovery is obvious—those that recover faster are better off than those that recover slower. So, don’t expect a reversal in the index here.

Since it has already broken down, taking this opportunity for oscillation and bottoming out is actually conducive to a rally in the second quarter. Currently, trading volume is clearly insufficient. In the first couple of days, it was okay, but as time goes on, rotation speeds increase. Once rotation stalls, there could be sharp declines. Today’s index shows a broad rebound, but most stocks’ gains were driven by the last hour’s follow-up. Plus, trading volume shrank, and only about 70 stocks hit the daily limit, so today’s rebound strength is modest and not beyond expectations.

Therefore, do not hold expectations of a reversal—consider it a oversold rebound. Aside from relatively focused sectors like power and some Token-related tech hardware stocks, most sectors and stocks are still better approached with a rally-and-sell mindset. It’s crucial to prevent a second test of the index. Yesterday and today are the best opportunities for oversold rebounds. If missed, be cautious after tomorrow—avoid the mindset of chasing gaps. Better to miss than chase high. Do not have a gap-filling mentality. Currently, the index needs to grind bottom, and it’s still tied to Chuanzi (a key figure or indicator). No one knows what he will say daily. If you missed the buying points yesterday and today, don’t rush to chase highs. For those holding positions that are underwater, tomorrow is the first chance to look for selling and reducing positions. The further out you go, the more you should wait for a second dip or a pullback to buy low—unless the index can surge with volume directly.

3. Sector Direction

At present, it’s still uncertain whether the market can focus on sectors with sustained momentum. Today’s rebound was relatively concentrated in two directions: one is power-related sectors, and the other is tech hardware linked to Token overseas expansion. However, these two sectors are more driven by sentiment and groupthink rather than sustained sector trends. So, don’t approach the market with a sector-based mindset now. Instead, respond with a short-term sentiment and groupthink strategy. April is approaching, and the market will soon enter a period of intensive earnings announcements, which involve all sectors and concepts, making it hard to focus and increasing market rotation probability.

If the market can stabilize here, some mid-term stocks that have previously stabilized could gradually enter positions, waiting for a second-quarter rally. Overall, I don’t recommend using a sector-based approach now. Wait until the market stabilizes with increased volume and sector focus. At that point, at least 1-3 large-cap stocks in each sector should show a trend. For example, aerospace, gold and silver, and the power sector earlier this year—all had at least three large-cap stocks showing a trend. The strength of aerospace is largely due to the emergence of multiple large-cap stocks.

4. Sentiment Direction

Today was a broad oversold rebound, but volume was insufficient, with only about 70 stocks hitting the daily limit, and only 4 stocks moving from 1 to 2 consecutive boards. During the broad rebound, stocks that advanced 3 or 4 boards all hit the limit and even fell into deep water during the session. So, the sentiment recovery today was moderate. Fortunately, Huadian (Huadian Power) quickly advanced to 7 boards, creating a staged streak and matching Yunnan Energy’s height. Most importantly, Huadian and Yunnan Energy belong to the same sector. From a sentiment perspective, this is very rare—since commercial aerospace, no other sector has seen such a rebound to new heights. In the current sluggish market, regulation is unlikely to intervene. Yunnan Energy’s breakout was a false move, so whether Huadian can break through and boost sentiment is the key focus moving forward.

Yunnan Energy’s breakout did not lift market sentiment, but Huadian’s recovery at the multi-dimensional resonance node has at least provided some uplift today. Around 10 am, when Huadian rebounded, the overall market sentiment was upward, especially in the power sector. As long as Huadian doesn’t fall back, the power sector’s sentiment-driven rally won’t end immediately. Today, the first and second boards in power are likely to see another group of stocks rallying, which may also boost Token-related stocks.

Currently, it’s a short-term trading phase. Focus on the front-runners in power and Token overseas tech hardware sectors for low-buying and group trading. The market’s capital style remains cautious—apart from a few leading stocks, most stocks that form a group trend are more volatile, with some strong days followed by weak days, or strong for two days then weak for one, etc. Only the top 1-3 stocks in each sector have trading value for chasing highs; other sentiment-driven stocks should be bought low and not chased high. For most other sectors, I see no short-term expectations.

5. Brief Summary

Regarding the index, I personally think the chances of a reversal are low; a second dip is likely, so be cautious. For friends who missed the buy points yesterday and today, be cautious about chasing highs starting tomorrow. Unless there’s a clear volume surge within the first half-hour of trading, expect short-term profit-taking after the oversold rebound. Today’s number of limit-up stocks, sector focus, and volume are all average.

For sectors, don’t rely on a sector-based approach for now. Wait until the market confirms stabilization with increased volume and sector focus. At that point, at least 1-3 large-cap stocks in each sector should show a trend. Currently, it’s more appropriate to adopt a short-term oversold rebound mindset and respond with sentiment and groupthink strategies. For example, power and Token tech hardware sectors are currently more driven by sentiment than by sector trends.

In terms of sentiment, based on the number of limit-up stocks and consecutive boards, today’s sentiment recovery was moderate. Fortunately, Huadian’s 7-board streak is a positive signal. Note that Huadian and Yunnan Energy are in the same sector. Since commercial aerospace, Huadian is the first to show a similar rebound to new heights. Therefore, power sector rebounds are a short-term trading opportunity—playing the same direction for high and low positions. Another focus is Token-related tech hardware, which involves institutional funds. When volume cannot sustain, Token stocks tend to be more entangled in sentiment-driven trading than power stocks. Be especially cautious about low buying and avoiding chasing highs.