[Red Envelope] Short-term breakout to new highs, the aesthetic leadership strategy is back, short-term cycle breakdown.

This week, the short-term market, which had been quiet for a long time, finally opened up significantly. It is truly a cause for celebration, and I believe those who trade short-term have gained quite a bit. In terms of themes, the power sector was strong in the first half of the week, while lithium batteries were active in the second half. Grasping the core was not a big problem. This time, let’s talk about short-term cycles, taking Huadian Liaoning Energy as an example! [Taoguba]

As everyone knows, the market’s short-term consecutive board heights have not been able to break through for the past few months. The last major trend in commercial aerospace also followed a trend with sudden movements, and the consecutive boards did not reach any significant height. This year, the first YN Energy Holdings came up as a one-word board, which has little reference value.
Previously, stocks like Shun Sodium, Jinda Zheng, Zhongnan Culture, and a few other operator-controlled stocks all stopped around 5 boards. The previous electric power stock, Huadian Energy, also stopped at 4 to 5! This week, a breakthrough from a consecutive board finally emerged, breaking the deadlock, and the process of breaking through is the short-term upward cycle.

The initial few boards of Huadian Liaoning can be seen as attempts. Before the third board, it can be regarded as a supplementary rally. On March 20, it surpassed Huadian Energy. That day, Friday, was a volume divergence board, and this Monday was crucial.
On Monday, the auction exploded with high volume and shifted from weak to strong, advancing to the 6th board, which is the first key focus point for short-term leading stocks. On this day, it exceeded the height of the recent months’ handover consecutive boards.

On Tuesday, it continued to advance, attracting attention from another group of traders because it reached the height of YN Energy Holdings, and these traders might think it had broken through. This is the second focus point.

On Wednesday, there has been a short-term trading pattern over the past two years where a severe abnormal movement on the day does not necessarily mean strength, and if it continues to strengthen the next day, it becomes a focus point, also called a severe abnormal movement pattern. I remember stocks like Zhengdan Co. and Yihua New Materials were very popular at that time.
So after Huadian Liaoning triggered a severe abnormal movement on Tuesday, its continued strength on Wednesday again drew attention from these traders. This is the third focus point.

The above are the three key focus points for Huadian Liaoning. For me, who prefers to trade from weak to strong, the Monday’s weak-to-strong auction turning made me feel uncomfortable without a clear buy point. The subsequent steps were quite straightforward. Even the ideas for the subsequent funds were pre-planned, just based on the points mentioned above.

On Thursday, there was another four consecutive movements in the same direction within ten trading days, with a second severe abnormal movement. Some funds worried about suspensions and faced the pressure of 200% over 30 trading days, leading to some divergence. The future also depends on the faith in the leading stocks.

Everyone’s understanding of the market varies. Some believe that exceeding 5 boards is a buy point, some think surpassing YN Energy Holdings is necessary, and others believe that continuing to strengthen after a severe abnormal movement is the real buy point. Therefore, Huadian Liaoning was able to continue with daily fund support and move upward.

Understanding these points in relation to short-term cycles makes it quite simple.
Huadian Liaoning’s auction turning from weak to strong on Monday marked the start of surpassing previous consecutive board heights, which is a short-term upward cycle. At this stage, stocks of all kinds in the sector can be played, and everyone can advance together. At that time, it represented many stocks like Energy Saving Wind Power, Dongfang New Energy, Jinkai New Energy, Shaoneng Co., Huadian Energy, and many others.
Monday and Tuesday both belong to the early phase of the short-term upward cycle.

Wednesday belongs to the mid-term phase, where most stocks are still performing strongly, while some are beginning to fall behind, such as Shaoneng, Energy Saving Wind Power, and the lagging Dongfang New Energy and Jinkai!

Thursday, more stocks in the back rows started to fall behind, and the stocks that advanced the previous day, like Shaoneng, Wind Power Energy Saving, and others, had little premium, with some directly in deep water!
When this situation occurs, it usually indicates divergence in this wave of the upward cycle.
On Friday, if the leader can continue to outperform expectations, the market will keep rising; otherwise, the sector will adjust, and the main short-term rally or consecutive boards may turn into a trend oscillation. We are currently at this stage.

This is the overall process of Huadian Liaoning. Of course, it’s not finished yet, because the core still gave a new high on Friday without breaking the 5-day moving average, so it’s not easy to call a top. As the first stock to show a turnover this year, currently, both severe abnormal movements have not triggered suspension warnings, and after oscillating around the 5-day line, a second wave is also possible.
Previously, YN Energy Holdings triggered a severe abnormal movement and was directly warned of suspension two days before regulatory action. I asked some friends involved with Huadian Liaoning this week, and many brokerages did not give risk alerts. In the past, some analysts said that single severe abnormal movements should not exceed 3 million yuan, but on Friday, many orders exceeded 3 million during trading, with several over 90,000 lots, indicating that regulatory oversight has somewhat loosened compared to before.

Finally, a brief comment on the market: the main index should continue to oscillate and bottom out in the short term. Small rises and falls are normal, and if it adjusts near the previous low, the risk is less than the opportunity.
Most of the weekend was filled with external conflict news. In the first few days of this week, the index broke sharply downward, and funds flocked to power stocks. Later, the market recovered and moved back in line with the index.
The power sector experienced continuous adjustments, with many stocks at high levels showing two bearish candles, while at low levels, stocks are still catching up. Next week, the sector is expected to see a flow back, especially if Huadian Liaoning can break through the 30 trading days of 200% pressure again. If it does, all rules for severe abnormal movements will be triggered, and leading stocks might even wake up laughing.
If not, then the next short-term cycle probably won’t exceed this height.

Yunnan Energy Holdings was warned about regulatory action two days before it was scheduled, and the first extension was for 10 days. Next Monday’s regulatory announcement will reveal whether it will be extended again. In fact, Huadian Liaoning has performed well under regulation, so theoretically, YN Energy Holdings should not be so fearful.

On Friday, lithium batteries were the sector with strength, and the trend of technology funds is temporarily shifting toward lithium batteries. The weekend has high popularity, and this can be played as a rotation. Monday is the peak, and follow-up is less favorable immediately after, but after a correction, a trend continuation is expected. Currently, the market is below 2 trillion yuan, and the possibility of moving forward together in the trend direction of the index is quite small. When lithium batteries are strong, technology stocks tend to weaken, but if the market expands with volume, they might move forward together.

This time, I mainly described the short-term cycle process: first identifying the leading stocks, then riding on their backs. I believe everyone who experienced this week will gain a deeper understanding and can do even better next time!
If you haven’t participated from the beginning to the end, and each time you tell yourself to wait for the next opportunity, the reality is that you might easily miss the next one too.

I won’t go into more details here; let’s observe the market in real-time, and I look forward to more achievements next week. Keep going!