[Red Envelope] Continue to anticipate oil and gas disagreements in advance; a weak recovery trend requires more caution!

Short-term trading is an art. It uses the ever-changing market as a canvas, with keen insight as the brush, and decisive execution as the pigment. True masterpieces are not born from chasing random fluctuations, but from precisely capturing and resonating with the market’s core “strength”—drawing directions at emotional peaks, structuring during sector rotations, and ultimately adding the finishing touch at the moment individual stocks lead the rally. ————Compound interest artist[Taogu Ba]

Artist’s Meal Review:

The day before yesterday’s review post was prepared to predict yesterday’s oil sector divergence expectations. Today’s oil sector performance successfully confirmed our prediction—two consecutive days of successful forecasts, which also reflects strength. If attentive family members can give the artist a like, comment, support, and tip, let me see how many of you have been seriously following the review posts!

Yesterday, we predicted that the oil and gas sector would continue to diverge today, and as expected, oil continued to show significant divergence. We also shared the logical thinking behind this. Funds that bought in low yesterday had enough intraday profit cushion; as long as they could successfully exit today, they could lock in profits. So, the early morning gap down was completely in line with expectations. Including stocks that successfully tested turnover and re-closed after high-volume trading, and also looking at yesterday’s stocks that broke the limit, their movements are consistent with our predictions. The only shortcoming is the outside news at the end of the day, which we have always emphasized. This direction is heavily influenced by news, making it difficult to game; the bold eat meat, the cautious eat meat.

Today, the index opened high, but volume was not fully expanded. After two days of continuous decline in Japan and Korea markets, and successful rebound, our rebound seems less sincere. Yesterday’s weak recovery was followed by today’s flat-volume broad rally. If this is truly a bottoming rebound, there’s no need for the market to first show a weak recovery and then continue with another weak recovery, especially since today’s movement was mainly affected by Japan and Korea. With the market at flat volume, funds are still testing the waters in various sectors, indicating a lack of clear direction and a weak rotation, reflecting that current funds have no preferred targets—they are just probing and trying new themes and directions. Due to insufficient volume, the index is gradually declining, and sector rotations lack sustainability; individual stocks are also retreating. All aspects indicate that at this level, there is pressure above the index. We should remain cautious, observe carefully, control positions, and protect ourselves!

Market Analysis Today:

From the index perspective, after a weak recovery yesterday, today’s early rally was influenced by Asian markets, with a high open at the start. The index closed at 4108.57, successfully reclaiming the 4100 level. Currently, the index is still below the short-term moving averages, facing some resistance. In terms of volume, today’s two markets traded 2.39 trillion yuan, a 1.03% increase from yesterday, but the rally lacked sufficient volume support. Market sentiment remains good, with 68 stocks hitting the daily limit up and 3 stocks hitting the limit down, indicating overall positive sentiment. The sharp correction in the oil sector did not crash market confidence.

From sector performance, rapid sector rotation is evident, with funds testing various areas. In the morning, the panel sector moved collectively, with many stocks opening sharply higher and hitting the daily limit. The power grid sector continued its strength, with several stocks hitting the limit early on, though some later experienced shakeouts. The tech sector also kept pushing higher, especially in storage chips, CPO, and other sub-sectors, which saw significant gains. Brain-computer interfaces, nuclear power, consumer sectors, agriculture, hydrogen energy, and computing power sectors also rose sequentially, with rapid sector rotation.

1. Oil/Shipping/Natural Gas
Today, oil and natural gas diverged as expected, with stocks showing significant polarization. The core reason remains the ongoing escalation of Middle East geopolitical tensions, prompting short-term profit-taking. Stock performance is polarized: some still outperform against the trend, like Zhongyuan Oilfield, while others like Intercontinental Oil & Gas hit the limit but failed to close the limit due to outside news. The Middle East situation remains the key variable; such news at the close can unpredictably impact the trend. This is a game for the brave; it’s advisable to observe more and participate cautiously, as short-term betting is quite challenging. Given today’s late news, the usual expectation was for a recovery tomorrow, but that may now change depending on overnight news and futures movements. After the afternoon news, futures and stocks are now moving in sync. Although index futures have been rising these days, individual stocks are showing divergence, which helps us use futures to gauge stock trends.

In stocks, the “three-in-four” attempts all failed, with Intercontinental Oil & Gas seeing large volume spikes. Tomorrow, the focus is on whether Shandong Molong can maintain strength or stabilize, and whether Intercontinental Oil & Gas will give a significant negative feedback. The strategy remains cautious—prefer to observe, as the game is complex, requiring quick entries and exits; avoiding participation may be safer.

2. Power Sector
The power sector was strong in the morning, with some stocks hitting the limit, as a form of market confidence. The China Western Electric and other high-voltage companies hit the limit, aiming to boost confidence. However, as the sector continued to ferment and combined with flat volume, many stocks started to shake out. The strength of the power sector at this stage is driven by multiple positive factors, with room for speculation and resilience. Today showed a slight acceleration, but the shakeouts indicate some profit-taking, suggesting tomorrow may see divergence.

Key stocks include Shun Na Shares, Jicheng Electronics, Hanlan Cable, which are currently in the same tier. Tomorrow, some may be taken out, and the leading Yunnan Energy Control has been driven up by the sector recently. The current risk-reward is not very high, mainly serving as sentiment reference; avoid deep involvement. Also, watch whether China Western Electric can stabilize the sector. Overall, tomorrow is expected to be a day of sector divergence, so focus on trimming weak stocks and holding the strong, avoiding chasing highs.

3. Panel Sector
Due to positive pre-market news, the panel sector surged early, with many stocks hitting the limit, including several 20cm limit-ups, making it the strongest theme of the day. This performance is more about funds testing new themes; whether it can become a main line remains uncertain. Intraday, the strength is evident; if tomorrow the sector opens with a few straight-up moves, it could support further attempts at arbitrage. The early morning surge involved significant quantitative trading; if the strength falls short, it’s better to observe and be cautious of quick profit-taking.

Rationally, can the panel sector become a main theme? The main positive factor is the micro LED CPO scheme, which has lower unit transmission energy consumption, potentially reducing overall energy use to 5% of copper cable solutions, and could become an energy-saving alternative for optical interconnects. This involves related areas like data centers, computing power, optical modules, and power supplies—interconnected and extending previous concepts. If this theme ferments, it might extend into data center computing sectors, leading to a “horse riding to find a horse” situation. The panel sector itself is not large, and lacks strong earnings expectations to support heavy speculation. Funds are generally not keen on these storytelling sectors; otherwise, sectors like robotics and batteries would have already become main themes. Also, past main themes like CPO, Fujian, and commercial aerospace are supported by solid earnings or national policies. The panel is just a small technical innovation. Quantitative models have been consistently strong, but when expectations are too uniform, divergence often occurs. Keep an eye on this sector, mainly for light positions and trial-and-error.

4. Computing Power
The logic for the computing power leasing sector remains unchanged: shortages of computing power, with news today indicating ByteDance starting to price compute resources. Essentially, this signals a shortage and monetization of computing power. Today, some core stocks opened high but then declined, mainly because funds had already entered early and chose to cash out after the open, leading to poor performance of key stocks. By the end of the day, Meiliyun and Tongniu Information surged, reflecting market optimism about this theme. The current approach is to buy on dips along the moving averages, avoiding chasing highs blindly.

Every morning, I share news and key stock picks. Follow the artist, stay in sync, avoid getting lost. The morning content is mostly my market expectations and sector analysis! Please like the posts, support with tips, or cheer!

You’ve heard many grand theories and market principles. Many still don’t know how to implement them. So I share my “Strength Pyramid System,” which can bring growth and value to you—worthy of your serious attention. Those who always want to get something for nothing will remain on the surface of trading, unable to grasp the core logic of profits. The original intention of sharing is to help those who follow this post not to be confused. But the market will evolve, and so will our “Strength Pyramid” system. In the future, as markets change dynamically, I will add new “dimensions” to it, making it better suited to different market cycles.