4.7 Review: Reduced-volume rebound with quantitative flattening of the market, strengthening the logic of emotional left turn and right consolidation.

After two consecutive days of declines, the market takes a breather amid consolidation. With 90+ limit-up boards providing warmth to the trading screen, but trading volume shrinking to 42.1 billion hides a cause for concern! Optical communications continues to receive follow-through, chemicals bounce hard from oversold levels, and power stocks stop falling and stabilize. Short-term sentiment hits an ice point yet warms up again, but the 3,900 level still has not been reclaimed. With the main theme still unclear, under quantitative rotation, holding a tight group becomes the survival rule in a weak market. [Taoguba]

Ride the trend to get started
After the index fell two straight days, today we saw a repair as overseas markets warmed up, but during the session it was also full of twists and turns. After a strong open and push higher in the morning, it pulled back in the afternoon, then rallied again toward the close. Total trading volume for the day was 1.61T, with volume shrinking to 42.1 billion. The Shanghai Composite still failed to reclaim 3,900, and the overall market continues to churn and adjust. After moving sideways, the market will face a choice of direction afterward.

As for themes, it’s hard to find true follow-through. Today, the quantitative strategy laid out the previously oversold chemicals direction. The sector saw 35 limit-up boards for the entire day, with limit-up value totaling 14.52B. All of them were first-board stocks, and most of the individual names are in a downtrend structure. Overall, this is viewed as an oversold rebound; combined with rotation and quant strategies, it’s basically not considered promising—cautious follow-up is the main approach.
Optical communications today saw some differentiation, but under the market’s repair, performance is relatively steady. There were 8 limit-up boards, with limit-up value of 8.57B. Huiyuan Communications continues to hold a one-price limit-up. Xintai Mountain and Falsuccess, which managed to avoid unusual-move restrictions, opened and went straight to the limit within seconds. Wasoning Technology hit a second board. The remaining four were also first-board stocks. Dahai Jun Hengtong Optoelectronics, as well as trend stocks such as Feilo Optical Fibre, mainly traded sideways all day. Here, the sector trend and most individual stock trends remain in an upward phase—continue tracking as the priority.
The football-related theme also had action today: 7 limit-up boards, with limit-up value of 6.07B, all first-board stocks. Shu Hua Sports led with a 7th limit-up in 16 days, and the probability of rotation is relatively high.
In healthcare and pharmaceuticals, after the divergence last Friday, today there was no meaningful repair. Although there were 6 limit-up boards, besides Jinyao Pharmaceutical’s 7th board and the reversal day return of Luyan Healthcare, the rest were all first-board stocks. Here, it’s more likely to shift into individual-name tight-group behavior; at the sector level, it should be difficult.
What’s worth noting today is the power sector, which has been retreating for multiple days. The real manifestation of a signal that it has stopped falling and stabilized shows up: a batch of declining stocks closed green. Among them, Huadian Liaoning was even more active.

Rise and fall of sentiment
Market sentiment and speculative sentiment are both at an ice point, yet rebound. After two consecutive days of broad-based declines across both markets, today we saw a broad-based rebound. Limit-up boards in individual stocks also exceeded 90. There are signs on the screen that the market has stabilized.
On the speculative side, there are several signals. One is Jinyao holding the line on the unusual-move breakout and advancing to 7 boards. Another is power’s bulk stopping the fall and stabilizing. Then today’s names facing unusual-move lines—Wanbangde and Haitai Xinguang—collectively responded relatively positively. Finally, Tdatong, Xinzhonggang, and Xinghui, which had negative feedback last Friday, performed better overall. Xinzhonggang even closed at limit-up. So although regulatory constraints are still in place, after risks have been released continuously in short-term sentiment, it still gives a “turning left or right” feeling.

Thoughts for tomorrow
Chemicals surged today, but its real significance isn’t that big. On the contrary, what’s worth focusing on today is the solid follow-through in optical communications and the warming up of sentiment.
As for the style of individual stocks on the board, it’s still dominated by tight-group behavior. This is because in a weak-market stage, themes can hardly sustain or deliver smooth main surges—the situation makes it hard.
Next, while continuing to wait for a breakout signal, and with short-term error tolerance increasing further, you can still appropriately place some bets on core names. In the current tight-group lineup, among the optical communications names with the best theme trend, there are the most—Xintai Mountain, Falsuccess, Tongding, Feilo Optical Fibre, etc., are all quite clear. Other branches also have plenty of options. For example, in power: Xinzhonggang, Zhongli; in finance: Youyou Oil; in photovoltaics: Guosheng; in sports: Shu Hua. Rather than getting swept up and “chasing” the most疯狂 rotation under quant, it would be better to further focus, and combine the timing based on the strength and weakness of names on the screen—then patiently look for opportunities around the tight group. Also, if the logic behind the tight-group is strong—especially if there’s support from industrial logic—and you add the market’s consensus force, then the probability of being harvested by quant strategies should be smaller.
In short, until the overall trend has not fully reversed, we should keep overall expectations as low as possible. Once you get through the storm, there will always be a new cycle to rise again.

Trading takeaways
Last Friday, both positions pulled back; today I exited safely from all of them. When Hangdian Shares surged at the open, I took my orders off and left at a flat position. Then Daan South also got cleared during the run-up. Even though it didn’t exit at the absolute peak, getting a small gain is already quite good.
I opened one new position, Tongda Shares. After the open, I paid attention. Although it once challenged limit-up, it was later blocked by Xinzhonggang. It closed with a slight unrealized profit.

Positions held after the close: 1 position in Tongda Shares.

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☑ Declaration: The views described in this article are only my personal review notes. Any opinions and individual stocks mentioned are used only as examples and do not constitute any investment advice. Please do not follow blindly. Trading is your own decision; investing involves risk; stock trading requires caution!
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