Light 0327 Weekend Recap Post: Are the leading stocks starting to top out? Do pharmaceutical, chemical, and lithium battery sectors have a chance?

First praise, then watch, good luck always accompanies, keep it up and earn a million a month! [Taoguba]
Part One Preface
How does everyone feel about the market on Friday? My feeling can be summed up in one word: “chaotic.” Over 80 stocks hit the daily limit across the two markets, spread across more than twenty industry sectors. In the electricity sector, let’s call it the old force, after all, electricity (initially starting with Bofei Electric and Broadcasting Equipment) has been in a major upward operation for three months since taking over commercial aerospace. When the old force weakens and diverges, the new force rises continuously, and this new force isn’t that new; it has flowed back due to funds having nowhere to go, led by the previous big brother.
Completing a “textbook-level” transition from the cycle’s initiation to the acceleration towards the peak, Huadian Liao Energy was smashed down to the limit on Thursday at the last second but failed to recover on Friday, thus entering the topping period, leading to an accelerated divergence in the entire electricity and power grid sector. On Friday, Xineng Taishan opened up with an 8-point bid while Liaoning Energy hit the daily limit. This is a typical feature of accelerated divergence, as there is no one leading the mood with a limit-up in the sector. Under the circumstances of high limits being broken, the risk of killing the mid-level stocks is inevitable; the market on Thursday and Friday was indeed targeting the mid-levels, with Shao Energy on Thursday and Liaoning Energy on Friday, leading to negative feedback for this batch of mid-level stocks. According to sentiment cycle theory, when the old ones are no longer strong and a sector divergence occurs, the new ones will naturally emerge.
As a side note: I previously wrote a post discussing the issue of cycle nodes, noting that nodes do not refer to the end of the leading stocks in niche sectors but rather the accelerated nodes of small-cap stocks within mainstream sectors. Huadian Liao Energy is a typical representative of the electricity 2.0 sector cycle dragon. On March 13, YN Holdings and Shun Sodium shares hit the limit down, while Hanlan shares were close to the limit down, with only Huadian Energy surviving, followed by Huadian Liao Energy’s limit-up on March 16.

Currently, the new forces are mainly reflected in the following three directions:
First is the chemical sector. The chemical sector serves as a defensive board, showing periodic performance over the past few months, characterized by a serpentine trend. When large tech software and hardware are not strong, and electricity and power grid equipment weaken, the chemical sector emerges to take the lead. In previous posts, I’ve mentioned that the chemical sector was born from oil and gas but separated from it; earlier leaders in fertilizers and coal chemical cyclic stocks such as Jinniu Chemical, Baichuan Shares, and Jinzengdazhong emerged, with the core logic being rising raw material prices and supply chain relationships. As long as the Middle Eastern conflict does not end and the price rise logic remains, we cannot simply assume that the chemical sector will conclude; based on the past two years’ trading in the first and second quarters, we know that chemical stocks (including chemical medicine) have consistently had limit-up stocks for three to five months, even producing high-flying leaders like Aiai Precision Engineering, Yongyue Technology, and Zhengdan Shares. However, the rhythm of this sector isn’t easy to grasp and appears quite chaotic. Where is the chaos? Because this sector has too many and too fine classifications, broadly divided into chemical materials, chemicals, chemical fibers, and plastics, and further divided into organic and inorganic, with subdivisions such as dyes, methanol… For example, brominated chemicals, phosphor chemicals, and coal chemicals all emerged in a frenzy on Thursday and Friday. Currently, the core identification rests on Jinmei Technology, which can be understood as a rebound in the former old chemical sector.

The other two are chemical pharmaceuticals and energy metals, which have very distinct characteristics. Due to risk-averse funds having nowhere to go, both are long-term holdings of state-owned institutional funds, arriving at this point in the context of the electricity 2.0 climax facing divergence, each led by their big brother. The big brother of pharmaceuticals is naturally “Big Medicine Box” Jiuan Medical, haha. The big brother of energy lithium batteries is Ningde Times.
In chemical pharmaceuticals, there’s a four-limit stock Meinuohua, and another one is Rongjie Shares, related to solid-state and lithium batteries. Both were stimulated by news, but many news items come out daily; the emergence of these two is, of course, a result of fund arbitrage, and they led the fund’s return to the sector on Friday. Particularly in pharmaceuticals, on Friday, not only was there Big Medicine Box Jiuan Medical but also Traditional Medicine Box Lianhuan Pharmaceutical, with three stocks hitting a 20-centimeter limit, definitely an arbitrage rhythm. This arbitrage rhythm tells me that there is a high probability of divergence on Monday, and whether a new cycle can emerge will need to be observed from the market. Solid-state lithium batteries also had a 20-centimeter limit-up with Haike Xinyuan. Of course, this doesn’t mean that solid-state lithium batteries are inferior to pharmaceuticals because the mainstream 20-centimeter stocks in this area seem to be relatively few; solid-state lithium batteries also need observation next week.

Why? Because the old forces in electricity and power grids may not directly end next week. After all, on Friday, the electricity and power grid sector had both high-low cuts, mid-level breakthroughs, and the second wave of old dragons. Moreover, the electricity and power grid sector isn’t just about thermal power and power grid equipment; it can also develop into new sectors of hydropower, wind, solar, and green power to enter a new cycle. As long as the thermal power giants Huadian and Huaneng don’t get A-killed, representing green power’s main business in hydropower generation, power grid sales, and bringing in the concept of wind and solar storage, the second board of Guangxi Energy can complete the separation from thermal power on Monday and lead the funds back in a continuous strengthening process. Therefore, next week’s market is expected to be very lively, but the difficulty will also be relatively high. Why? Because there are currently five lines in the market, similar to the five hegemons of the Spring and Autumn period. There are not only electricity and power grids but also chemicals, chemical pharmaceuticals, solid-state lithium batteries, and rising prices in big tech hardware components, hence the era of the five hegemons contending for supremacy. Let’s see if we can produce a Qin that can extinguish the six nations! Oh my! The six nations, the six chemical nations also hit the limit on Friday. Is it a mystical hint that the first to fall behind is chemicals? My dear! If on Monday we can produce a Qin that extinguishes the six nations, it means unifying the market! At this moment, as long as the dragon and tiger list shows the presence of figures like Xiao Qunzhong, of course not just Xiao Qunzhong, it is possible that a grand unified market environment similar to commercial aerospace, the western strait, and electricity 2.0 will reappear! Looking forward to it!

                                                                           Part Two  Friday Market Overview  

The market on Friday was summed up in one word: “chaotic.” The electricity and power grid sector oscillated with divergence all day, while solid-state lithium batteries rose rapidly, and chemicals and pharmaceuticals alternated in performance, with computing rental continuing to decline, leaving only a few sporadic sparks barely surviving. Oh dear! Another ominous statement, especially since I still hold the second explosive stock Aori; Monday looks tough.

1. Market sentiment data
   Transaction volume: The transaction volume of the Shanghai and Shenzhen markets was 1,864 billion yuan, basically unchanged from Thursday’s 1,957.1 billion yuan, with two consecutive trading days below 2 trillion yuan in transaction volume. Huadian Liao Energy has already reached a high point; does it set a precedent, indicating the arrival of spring in sentiment? Among the five stocks with a transaction volume of over 10 billion, Ningde Times with a market value of over 1 trillion rose by 3.4%, and Ganfeng Lithium with a market value of nearly 100 billion hit the limit. There were 22 stocks with over 5 billion. Most stocks in the battery direction showed red K lines, while technology hardware had more black K lines.
   Number of rising stocks: 4,337, with 1,157 waiting to rise.
   Limit-ups and limit-downs: 73 limit-ups, 2 limit-downs.
   Limit-up ladder: 10 stocks, including 3 with four limits, with Thursday’s four stocks making it to three boards. The third board had six stocks on Thursday, with one not advancing. Seven stocks on the second board, with an advancement rate of 22%.

Four-limit stocks: The highest in the market, three stocks, including one in electricity, one in chemical pharmaceuticals, and one in energy metals.
Xineng Taishan: smart grid, under Huaneng, replaced Hunan Development which was dropped on Thursday. Hunan Development, you do the first day, Xineng Taishan can do the fifteenth.
Meinuohua: chemical pharmaceuticals, synthetic biology, raw material intermediates from Zhejiang. I heard Huang Mao’s visit to China was postponed from April to May. Does it mean you still have a board? But, hey, no matter how awesome you are, you’re just a medicine box in others’ eyes, pitying you for three minutes.
Rongjie Shares: lithium mining leader, lithium carbonate, upstream materials for lithium batteries, solid-state batteries from Guangdong.

Two-limit stocks: Seven stocks
Guangxi Energy: hydropower, wind power, photovoltaics, storage from Guangxi, extremely reduced volume limit-up.
Jinkong Power: thermal power, photovoltaics from Shanxi, explosive divergence and turnover board.
Interesting, water and fire, one south and one north, both Western provinces, both with an “an” sound. Mystically, is it mutual generation VS mutual restraint?

Jinmei Technology: chemical raw materials, coal chemicals, ethylene glycol, zinc, tin, lead small metal mining concept from Inner Mongolia. Speaking of which, Inner Mongolia has produced a big bull stock, Junzheng Group, also in chemical raw materials; you aren’t just here to run alongside, are you?

Shida Shenghua: batteries, lithium hexafluorophosphate, Ningde Times concept from Shandong. It is said your name suggests that the new cycle leader can surpass Huadian? Just because you have momentum, can you surpass Huadian? Hmm, no wonder the Americans are shouting that if Huadian doesn’t listen, they will sanction!

Wanbangde: traditional Chinese medicine, biological vaccines from Zhejiang. One Western medicine, one Chinese medicine, Zhejiang really knows how to play, integrating Chinese and Western medicine to treat Da A.

Shenjian shares: plastics, commercial aerospace, low altitude, satellite navigation, robotics, high-speed rail from Anhui. Haha, last December, you were running alongside the high-speed rail title, achieving eight consecutive limits; I applaud you. Otherwise, you should take off your high-speed rail hat now to avoid being called “the high-speed rail is just a runner” when the limit is broken later.
Dadongnan: plastics, composite copper foil, lithium batteries from Zhejiang.

First-limit stocks: 63, skipped for discussion.
Chemical direction: 17 stocks, divided into 6 in chemical raw materials and 6 in agricultural chemicals.
Electricity and power grid: 8 stocks, of which 5 are in electricity and 3 in power grids.
Pharmaceuticals and medical: 12 stocks, with 6 in chemical pharmaceuticals, 3 in biological products, and 2 in medical equipment.
Lithium batteries: 13 stocks, upstream lithium mining materials and batteries.

Summary: March is almost over, and the market hasn’t performed too well, but it’s not too bad either. In the current market, understanding the offensive logic of market funds, capturing the main thematic lines at important time windows, and focusing on mainstream core identifiability is the path to heaven; otherwise, it’s hell!

There are no shortcuts or secrets in trading; only learning and summarizing more, seriously reflecting on gains and losses daily, continuously doing homework, and carefully reviewing and observing the market can prevent being swayed by emotions and led by others, enabling a clear understanding of the logic behind market trends and striking when there is certainty!

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