[Red Envelope] The fan is smoking, and the next expected divergence is here!!!

The electric fan is spinning wildly. You might think you’ve caught the main trend, but you’re just passing through a lively scene. [Taogu Ba]

2026-3-6 Review

1. Market Overview

Affected by last night’s external declines, the market opened near 4,000 points, with the main index slightly pulling back. However, the yellow line showed strong performance, opening lower and then rising steadily. Focus was clearly on small-cap stocks. Although trading volume continued to slightly shrink, the market’s focus on micro-cap stocks with low liquidity reliance was correct, leading to a decent rebound in the early session. During the rebound, within the first 20 minutes, multiple sectors rotated rapidly, with the fan spinning wildly. In this process, integrated computing played a relatively strong role, with computing power and smart grids showing good performance. Other rotation sectors included chemicals, gas turbines, agriculture, pharmaceuticals, AI hardware, and more. The market has limited funds and many things to do, so each sector shares the pie, resulting in modest gains and difficulty in creating strong intraday short-term profit effects.

In terms of investor sentiment, although there was increased divergence yesterday, today saw clear recovery. The competition among leading stocks was very active, and previously lagging stocks like Yasheng Group, Changyuan Donggu, Taijia Co., Ltd., also showed strong recovery. Yunnan Energy Holdings continued to hit new highs, and short-term speculative sentiment returned to normal.

The total turnover across both markets was 220.011 billion, down 18.29 billion from the previous trading day, a decrease of 7.72%. There were 4,069 stocks up, and 105 stocks down. Overall, the market showed a weak rebound with shrinking volume.

2. Major Indexes

Although today’s market performance was not weak overall, trading volume continued to decline, indicating that the rebound is still a short-term relief rally rather than a sign of a strong market confidence reversal. However, the risk aversion caused by previous uncertainties has eased significantly, with the market becoming more resilient to external factors. Systemic risk has decreased, and the short-term safety margin has improved. Under this expectation, limited volume means the rebound space is constrained unless there is a noticeable liquidity rebound. The increased safety margin also suggests limited downside, and with stability expectations during the meeting, the market is expected to continue a healthy oscillation.

Looking at the Shenzhen Component Index structure, the previous Zone 1 and Zone 2 are gradually merging into a larger oscillation pattern, indicating an upgrade of the central zone. However, the lower half of this zone has much lower trading density than the upper half, so we temporarily analyze them as two zones for clarity. Recently, there has been repeated contention around the midline of zones ① and ②, partially digesting the support and resistance at this critical point. Expectations for further integration of zones ① and ② are increasing (boundaries becoming more blurred). As long as this larger zone is not broken downward, the overall market structure remains positive. Additionally, the weekly chart of the Shenzhen Component Index closed above the trend line today, temporarily alleviating the risk of a structural breakdown, which is a technical sign of increased safety margins.

3. Market Sentiment

Yesterday’s sentiment divergence increased, but we analyzed that it was within controllable limits. As long as Yunnan Energy Holdings does not experience a significant decline, short-term sentiment can remain operational. The worst-case scenario is a high-low expectation. From today’s performance, not only did low-priced stocks show strength, but also some previously lagging stocks at high levels experienced significant recovery, demonstrating good tolerance for speculative risk. This confirms that yesterday’s divergence was a healthy positive disagreement within the sentiment. Today’s continued positive trend in speculative sentiment maintains a favorable outlook.

In terms of rhythm, as long as Yunnan Energy Holdings does not experience extreme continuous declines, speculative sentiment will likely remain positive. Currently, it would take at least two large downward moves to break its support, meaning that in the short term, positive sentiment remains intact, maintaining a certain level of safety. The recent breakout and new highs of Yunnan Energy Holdings will further stimulate low-positioned stocks to catch up, increasing the expectation of 5-6 consecutive limit-ups among low-tier leading stocks. As more low-tier leaders emerge, the market’s battle for dominance will continue. Currently, 20cm remains the main battlefield for speculative trading.

4. Sector Analysis

(1) Computing Power
On March 5, the work report proposed implementing large-scale intelligent computing clusters, computing and electricity collaboration, strengthening nationwide integrated computing power monitoring and dispatch, and supporting public cloud development. This is why the computing power sector performed relatively strongly today. It is directly linked to power, with market speculation focusing on computing and electricity collaboration. The short-term logic has shifted: previously, the game was about the shortage of computing power, leaning towards leasing models; now, the focus is on data center-related segments. Recently, many new faces have led the gains, while older leaders have been passive, reflecting a change in underlying logic.
From these two perspectives, the shortage of computing power has a more immediate industrial logic with greater resilience and long-term potential. Computing and electricity collaboration is more driven by short-term news stimuli and depends on sustained news support. The core stocks associated with these two logic paths are entirely different, and their rhythms are also distinct. Currently, the computing and electricity collaboration logic is less likely to sustain short-term explosive growth and may be affected by power sector adjustments. The shortage of computing power has more mid-to-long-term value, especially when leading stocks in related sectors reassert strength.

(2) Power Sector (Smart Grids, Gas Turbines, Generators, etc.)
The power sector has been strong for two days. Normally, today might have been expected to show some divergence, but positive news about computing and electricity collaboration and gas turbines pushed it further. This segment’s recent rise will likely increase market divergence expectations, favoring strong stocks and leading to a focus on core leaders, with weaker stocks falling behind. Going forward, chasing high is not recommended; patience is advised for opportunities after healthy divergence or when divergence converges.

(3) Chemicals and Agriculture
These sectors also rotated today, mainly as part of previously defensive segments. Although the market is becoming more desensitized to uncertainties, the underlying logic still exists, and rotation among these sectors is normal. The rotation is somewhat random, similar to pharmaceuticals. These are less likely to become main themes but may have some individual stocks with strong logic. The chemical sector’s price increase logic remains valid, but the rhythm is more suitable for left-side considerations.

(4) AI Hardware
Since the US stock market plunged the night before, and we did not follow the decline, the past two to three days have shown good performance. The impact of US market feedback has diminished significantly. The sector continues to follow the high-low split rhythm, with low-priced stocks leading the rebound, such as Liante Technology, Kexiang Co., Shannon New Creation, etc., which did not rise much in the previous wave. Meanwhile, core stocks like Changfei Optoelectronics continue to decline. We have been emphasizing the high-low split pattern for a few days, and it will likely continue. Focus remains on low-priced stocks for rebounds, with a preference for left-side trading. AI hardware is sensitive to liquidity; in the current environment of weak liquidity, sustained explosive moves are unlikely. Chasing highs may disrupt the rhythm. Overall, the strategy is to buy dips and avoid chasing highs. The main sub-sectors are optical modules and storage chips. When selecting stocks, avoid those with performance risks during earnings disclosure periods.

(5) MicroLED
Based on yesterday’s sector breakout logic, MicroLED is a new branch of optical technology. Today’s auction performance was below expectations, which we promptly warned about. However, the attempt to recover during the session kept it in sync with AI hardware. Although the continuous explosion expectation has decreased, and the probability of hitting the limit-up path has reduced, as a new branch of AI hardware, this expectation is not entirely invalid. Future observation will determine whether it can stay in sync with other AI hardware segments. If it does, it will be integrated into AI hardware as a new sub-theme; if not, it will be considered invalid. Continued monitoring is necessary. Compared to other AI hardware segments, if MicroLED can follow the trend, it will repeatedly present left-side trading opportunities. Its advantage is clearer core stocks, with targets like Sanan Optoelectronics at 10cm and Huacan Photo at 20cm. This sector requires ongoing tracking until the rhythm is definitively invalidated.

Overall, the rotation market’s sector continuity expectations are somewhat diminished. However, speculative sentiment remains strong, and short-term opportunities will continue to emerge. Today’s review is posted first; as usual, additional insights will be provided on Sunday afternoon or evening based on weekend news, pinned in the comments.

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