[Red Envelope] Prediction all hit! Keep looking for the next "Huagong Technology," and also share the stock selection strategy during volatile markets (valuable insights)

Oscillating Market Stock Selection Model (Practical Tips), placed in Part Four of this article. Be patient and keep reading… [Taogu Ba]

1. Portfolio holdings (sorted by position size):

1. Sunshine Power, 30%, focus on the low point half a month ago;
2. New Easy盛, 20%, focus this week;
3. Shenghong Technology, 10%, focus on the bottom before the Spring Festival;
4. Yingweike, 6%, focus a month ago;
5. Luoyang Molybdenum, Industrial Bank Tin, total 6%, lurking on Friday;
6. Huagong Technology, Tongfu, unfollowed on Friday;

Today, the market once again proved with its movement: The panic-wide decline on March 3rd, and the subsequent rebound in the second half of the week, were successfully validated! Overall, Monday saw a rebound and rise, Tuesday and Wednesday experienced sharp drops and adjustments, and the latter half of the week continued to recover and rebound, all confirmed as expected.

Today I want to emphasize again: The market in March is a battle of oscillation, a feast for strategic positioning, and a trap for chasing highs!

2. Market review today: Continued oscillation and recovery, highlighting “high-low differentiation”

The market today continued its oscillation and recovery trend. After a slight dip at the open, it consolidated with some fluctuations, then gained some strength and moved slightly higher. Ultimately, major indices closed slightly in the green, with volume staying moderate—no excessive expansion or contraction, which aligns perfectly with my previous judgment of “a gradual upward oscillation in mid to early March”—a recovery without overreach, oscillation without panic.

From the market environment, the most prominent feature now is the high-low differentiation and increased rotation. This is a typical characteristic of oscillating markets: on one hand, stocks at high levels, especially those reaching new highs recently like CPO, high-end manufacturing targets such as Tianfu, Luobo, Changfei Optical Fiber, show clear signs of profit-taking, with ongoing pressure for correction; on the other hand, bottomed-out stocks and those consolidating previously, like Huagong Technology, are gradually warming up, with funds shifting from high to low levels, highlighting rotation strategies—completely consistent with my long-standing emphasis on “not chasing highs in oscillating markets, seeking lows.”

Besides, overall market sentiment is becoming more rational, with no extreme panic sell-offs or frenzied chasing of gains. Both bulls and bears are in a relatively balanced game. This environment tests investors’ stock-picking skills and mental resilience—being able to identify bottoming opportunities and avoid high-level pullbacks, not being swept up by short-term fluctuations, is key to standing firm amid oscillations.

3. Trend projection: One of the three major highs has been validated; caution needed for correction risks next week and mid-to-late March

Before the Spring Festival, I already provided a core projection for March: in the first half of the month, expect high-level oscillation; in the second half, be cautious of potential top adjustments.

Now, more than half a month after returning from the holiday, our predictions continue to be validated.

There are three major highs expected in March: the first was mentioned before the festival—a new high around 4190 points in early March (which was confirmed this Tuesday). The correction after this high has also come as expected—this is the first validation—market movements prove that my analysis is not empty talk but based on deep market logic.

The other two highs are scheduled for next week and mid-to-late March.

Next, these two potential peaks in the coming week and mid-to-late March will be key correction windows. In other words, after a recovery next week, a small high might form, then the market could oscillate until mid-to-late March, possibly forming another false breakout high, before a real correction occurs.

Why do I repeatedly emphasize the correction risks in these two timeframes? The core logic has two points: first, the index is currently in a high-level sideways consolidation, lacking sustained upward momentum. Every rally will be met with profit-taking, forming a high-level sideways range—an inevitable pattern in oscillating markets. As shown in the chart, a pullback to the lower boundary of the range will trigger a rebound (which explains why I confidently predicted a rebound in the second half of this week during the sharp declines). Similarly, each time the index approaches 4190, it tends to correct. Second, institutional sectors are still in the process of bottoming out, lacking the capital support for sustained upward movement, making it difficult for the index to rise unilaterally. Instead, after a rally, a correction is likely, which is the core reason for the “rise and then adjust” pattern in March.

But there’s no need to panic excessively. The corrections in March are mainly short-term adjustments, not trend-breaking declines. The purpose of these adjustments is twofold: to realize profits at high levels and to build a bottom and wash out positions at low levels, preparing for future gains. As I’ve always said, in oscillating markets, corrections are opportunities, not risks—what matters is whether you can see the essence of the adjustment and find precise positioning opportunities within it.

4. How to respond during this market phase: seize lurking opportunities, identify start-ups, avoid chasing highs

The current market is in a critical phase of “oscillating bottoming in March, switching between highs and lows.” It’s neither a bull nor a bear market but a typical oscillating battle. In this environment, the worst thing is blindly chasing highs or panicking at lows. The core strategy is “precise positioning and risk avoidance.” Here are three practical tips, no fluff—each supported by specific stocks, easy to understand and implement!

First, stick to bottom positions and embrace stability

In oscillating markets, stability is the biggest advantage. Instead of chasing uncertain high-level stocks, it’s better to position at the bottom or consolidation zones, enjoying steady recovery. Like the stocks we discussed before and during the Spring Festival—Sunshine Power and Shenghong Technology—these are currently consolidating at the bottom, with no excessive gains or sharp declines, typical bottom-positioned stocks.

From their movements, Sunshine Power has been oscillating between 140-156 yuan, with three strong rebounds near the 140 support level. Although its rebound strength is weaker than some hot sectors, it’s stable—avoiding new upward waves and high-level corrections. Even on the big decline days this week, it remained relatively steady, avoiding large losses and offering patience for a potential recovery after bottoming out.

Similarly, Shenghong Technology, discussed before the festival, also bottomed out during the holiday. If you lurked during its bottom consolidation, you wouldn’t worry about short-term extreme volatility. It even rebounded after the holiday, demonstrating the core value of bottom-lurking—stability.

Second, identify bottom rotation signals to catch main upward waves

The key opportunity in oscillating markets is not only bottom lurking but also bottom rotation signals—stocks that, after sufficient adjustment and bottoming, start to rise strongly, often leading to a significant main upward wave. This is crucial for exceeding returns in oscillating markets. A prime example is Huagong Technology, which I identified and commented on the very first day after the Spring Festival.

Huagong Technology started its upward move on the 24th, just after the holiday, and successfully surged to new highs within two weeks, perfectly validating the importance of “recognizing bottom rotation signals.”

These stocks typically feature: thorough bottom consolidation, gradually increasing volume, and clear start-up signals. If we can accurately identify these signals, we can seize main upward opportunities during oscillations. Going forward, focus on stocks that have completed bottoming and are beginning to increase volume—these are prime candidates for rotation plays.

Over the weekend, I identified another similar start-up signal stock. On Monday, I’ll check if it can become the next “Huagong Technology”! Looking forward to it.

Third, firmly avoid chasing highs and beware of pullbacks

In oscillating markets, the biggest risk is chasing high levels—especially stocks reaching new highs recently, which carry significant correction risks. Chasing these can easily trap you in “buy high and sell low” situations. I keep reminding everyone: March is a bottoming phase with weak sustained rebounds. Even if high-level stocks perform strongly in the short term, they are unlikely to continue rising, and after profit-taking, they tend to pull back. Recent examples include Tianfu, Luobo, and Changfei Optical Fiber.

Tianfu, a core optical module stock, surged significantly before the holiday. Chasing at the top now risks a correction in the next two weeks. Luobo, which nearly doubled in three months, has started to decline after reaching a high. Chasing blindly in these high zones will likely lead to a pullback and losses.

It’s clear that recognizing bottom or rotation signals is more advantageous than blindly chasing new highs—both in terms of stability and risk management!

Actually, as shown in the chart, I’ve given an example before: when a stock truly pulls back to the bottom for accumulation, most retail investors overlook it. Even if they notice, they can’t withstand the oscillation and bottoming process, especially when others’ stocks are surging, making them feel they missed the opportunity. So they often sell at the bottom and chase high-flying stocks.

As shown, after a month of bottoming and accumulation, a stock that starts rising for two or three days to new highs will attract widespread attention. Retail investors then fear missing out, sell their bottom-positioned stocks, and chase the new high, only to see it pull back sharply again—creating a vicious cycle.

But rationally, everyone should understand that the bottom is the best time to position, and new highs are just a validation of the bottoming process. When a stock rises, it often means the opportunity to buy at the bottom has passed.

Most retail investors tend to go long only when a stock hits new highs, with bullish reports everywhere, which is contrary to sound investing. This is a major reason why about 80% of investors lose money over one or three years.

Because chasing highs is essentially gambling—betting on tomorrow’s or the day after’s rise or fall. True investing involves deep research at the bottom, understanding growth logic, and using time to verify judgments. That’s called investing. Investing requires time to prove correctness. Gambling and speculation are about immediate gains or losses.

For example, during the Spring Festival, those who sold bottomed-out stocks like Shenghong and Huagong, or chased the hype stocks like Tianfu and Changfei Fiber, will see very different results after half a month. It’s a good illustration.

So, we must understand whether we are trading based on daily fluctuations or truly investing. If you’re betting on daily or next-day moves, that’s gambling. If you’re investing, you’re making judgments about future industries, technology, and companies.

For instance, if you’ve been betting on the real estate sector, a declining industry, the results may be poor—reflecting poor judgment. But if you’ve been investing in AI computing power, which is set to explode over 2025, that’s a correct judgment. The small fluctuations during bottom oscillations are insignificant over the long term—what matters is your vision of future industries and development.

Once you understand this, you’ll realize that real stock investing is about bottoming and positioning, not chasing new highs when institutions and the market hype it up.

Why emphasize this? Because March is the bottoming phase for most institutional sector stocks. The opportunities in March should be cherished, not wasted on those “popular stocks” that have doubled recently.

That’s it for today’s insights. I hope this helps everyone better navigate the stock market and understand how to approach March. Be clear about your strategy. Next week, let’s identify the next “Huagong Technology” at the bottom.

Stay committed to bottom-lurking stability, seize the start-up opportunities, avoid chasing highs, and don’t let short-term fluctuations or market sentiment sway you. Remember, in oscillating markets, short-term gains or losses are less important than understanding the big trend, sticking to core logic, and maintaining patience and perspective. Only then can you protect your core assets and seize opportunities in March’s battle, laying a solid foundation for Q2.

Finally, I hope everyone who reads this will like, support, and tip our main post. Your support is my motivation to keep sharing. Thanks also to those who tipped and supported the previous post: @LaoLaiZongHeng @LanAnshj @ShunShi86Fen @GaoLeGeGao @Iamgroot @FanShenZhan @YuanXiaoEr @ManReQ @YuanXiaoEr @Michelangelo @JieZhuYaoGu @ShunShi86Fen @LanAnshj