[Offense and Defense Practical Strategies] — April 1 Pre-Market Outlook

Objective information: [Taozhibang]

The total turnover on both markets was 199.25 billion yuan, an increase of 76.7 billion yuan versus the previous trading day. 903 stocks in the two markets rose, while 4,190 fell. All three major indices closed lower. There were 53 stocks hitting the daily limit up, and 1 stock hitting the daily limit down in reality. The Shanghai Composite Index tried to rally and then failed to fully fill the gap; the ChiNext Index and the STAR Market 50 Index both closed at new lows.

In terms of short-term sentiment, at the opening auction there was a collective “bear reversal” (reverse to buy) reaction, but after the open the strength of the reverse reaction was weak, unable to bring about an overall sentiment recovery. Going forward, there’s only another approach—shifting to a game of betting on and holding high-position winners. Shenjian Co., Ltd. advanced to 5 consecutive limit-ups, becoming the newly established highest streak for consecutive daily limit-ups. Although the loss-making effect is still quite significant in the mid-to-high ranks, the performance of the low-to-mid tier has been acceptable; the performance of the first boards and the 1-to-2 follow-ups also was not bad. The 20cm segment produced 2 consecutive boards, delivering a total of 6 limit-ups overall, with performance better than the average level in the earlier session.

On direction, nearly all recent hotspots have adjusted; only the aerospace and the “wanwan” direction show rotational performance. The other rotational directions are all minor skirmishes.

Personal thoughts:

Since the top-to-bottom adjustment, the market has gone through consecutive sharp sell-offs, followed by a rushed rebound after the plunge. We said that rebound was relatively certain, and those one or two days also had the most flexibility. After that, the market entered a consolidation phase. At present, the broad trend downward has not changed, while the smaller structure still maintains a sideways trend. Judging from yesterday’s overall market performance, the internal driving force is still fairly weak. Unless there is strong external stimulus, the difficulty of quickly turning bullish here remains very high.

But external force has arrived: the U.S. stock market feedbacked with a big rebound. Today, A-shares may open much higher. However, if the opening gains directly兑现 (realize) the rebound move, it’s hard to know how much intraday rebound room remains for the rest of the day. So here you still need to watch for a “open high and then fall”走势. Don’t rush to get on the train just because of a high-open at the auction. Only if, after opening higher, it can trade with volume and move higher, would it count as exceeding expectations. Even if confirmation comes a bit later, and even if you buy at a higher price, it’s still better than muddling into a “open high, then slide but fail to recover” strength situation. In a weak market, being afraid of opening high is something to be wary of at this stage. And today is also April Fools’ Day—so you need to be especially careful…

In terms of short-term sentiment, yesterday’s early session did some sentiment repair, but in the middle it was disproven. After Huadian Energy pulled back up again, its impact on overall sentiment was not big. Only Huadian Liaoning followed, taking the path of a high-position group play. Whether a high-position group play can continue largely depends on whether the market continues to weaken. The worse the market, the more active high-position group plays often become. So whether to participate is a matter of personal views. If there is a strong tendency for the market to rebound, then you should participate less in group trades. If the environment is poor and the group play continues to strengthen, then this “cake” is also a high-risk, high-reward deal. You have to know that once the group play breaks down, receiving the last baton is usually extremely brutal. Therefore, only seasoned drivers with a high risk appetite are suitable to participate; new beginners should mainly watch and learn.

For sectors, they have all weakened temporarily and you can’t see any clear expectations. Prejudging is meaningless—you can only observe again during the session as the market chooses.

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