[Red Packet] Open high and stabilize at 4200, embrace the trend, wait patiently, taking hits from both ends is not acceptable

Short-term trading is an art. It uses the ever-changing market as a canvas, with keen insight as the brush, and decisive execution as the pigment. True masterpieces are not born from chasing random fluctuations, but from precisely capturing and resonating with the market’s core “strength”—drawing directions at emotional peaks, structuring during sector rotations, and ultimately adding the finishing touch at the moment individual stocks lead the rally. ————Reinvestment Artist[Taogu Ba]

Artist’s Dining Hall Review:

Today, the index opened high past the double top resistance level, directly surpassing 4200 points. This high open above resistance indicates a certain attitude from funds. During the session, the index also retested with a pullback for confirmation. Although the safety of the index is still relatively good, similar to individual stocks, when a stock gaps up and breaks through previous highs or key resistance levels, its subsequent trend is usually decent. Even if a pullback occurs, it’s worth observing whether it can be effectively supported at the previous resistance level. The same logic applies to the index. Moreover, today’s upward attack was with increased volume. Such a large volume definitely isn’t from just 10,000 or 100,000 retail investors pooling their money; it indicates that some trapped funds have entered the market. Of course, volume is generated by both buyers and sellers—there are funds selling off their holdings here as well. Profit-taking and risk coexist. We cannot predict exactly when the market will turn; it’s better to hold onto your positions and wait for the wind. The task of stabilizing above 4200 is accomplished. Going forward, the main trend is likely to be a volume-contracted oscillation, grasping small rotation rhythms. As long as volume doesn’t shrink to an extreme, with such a large capital base, it’s mostly flowing within various big sectors, moving from one to another. This is also why recent high-priced, high-market-cap, trend-following stocks perform better—they provide excellent capital vehicles for big funds.

Today’s Market Analysis:

From the index perspective, on Friday night, U.S. tech stocks continued to surge, and early trading in Japan and South Korea also looked good. The index is already very close to 4200, and the auction directly opened above 4200 with volume. The index is safe for the day. Although there was a pullback during the session, it’s clear that mysterious forces are at play. From volume perspective, the combined turnover of the two markets was 353 billion yuan, a 16.08% increase from yesterday, with 490.3 billion yuan traded. The increase in volume is quite significant; maintaining the same volume in the future will be difficult, and in the next four days, volume is likely to contract. From sentiment perspective, 92 stocks hit the daily limit up, 3 stocks hit the limit down, 303 stocks rose, and 2024 stocks fell. The index is strong, the market-wide rally is positive, and sentiment is good, but the profit-making effect isn’t very obvious.

From sector perspective, the chip sector is recovering, with heavyweight stocks like Lanqi Technology hitting the daily limit during trading, and others like Haiguang Information following suit. In storage, Jiangbolong briefly hit the daily limit, with Buwei Storage and others also rising. In AI hardware, Tongding Interconnection and Hongban Technology hit three consecutive daily limits. PCB, optical fiber, and CPO sectors all maintained certain strength, with core stocks strengthening and low-priced rebound evident; Datan Power’s collapse and rebound, Huadian LiaoNeng hitting three daily limits in four days. Additionally, affected by the virus, the pharmaceutical sector moved collectively during the session, with several stocks hitting the daily limit. Financials dragged the index, helping it stay above 4200. Other sectors like robotics, commercial aerospace, and computing power rotated quickly within the day, with funds flowing back into them.

Artist’s Sector Commentary:

1. Computing Power
   At the open, the performance was relatively weak. Core stocks like Ligong Electronics almost hit the limit down, and Dongyangguang was also deep in the water. The overall sector’s weakness was not surprising. The correction here is normal, especially after a prior surge. It’s been reminded before to watch for signs of stagnation in core stocks at high levels. When a stock or sector shows signs of stagnation, it’s wise to be cautious of a correction or a big decline. The fact that some core stocks can be pulled up from deep lows indicates funds are willing to take on risk during divergence periods. The overall logic remains intact: after continuous divergence, the sector is showing signs of correction and potential recovery within the day. Tomorrow, a rebound is expected, so it’s good to look at low-priced sectors for potential rebound.

2. Semiconductors
   Semiconductors and chips followed the external trend and continued to explode today. However, overall, the strength at high levels has slightly waned, while mid- and low-priced stocks are showing more obvious rebound strength. Today, storage chips performed strongly, mainly following external trends. The intra-day consistency is high, and tomorrow’s expected trend is likely to show divergence. The strength of CPUs is somewhat weaker, showing signs of being pushed up by the broader tech sector. Many of these trend stocks are trend-following, with many of the better gains in 688 series stocks, which set a high threshold for average investors to participate in and enjoy. For these trend stocks, as long as the chart remains intact, they can be held or entered during divergence, waiting for rotation. When high-priced stocks become less cost-effective, look for low-priced rebound opportunities. If a significant negative feedback occurs at high levels, it may signal the end of the short-term trend.

3. Commercial Aerospace
   After Juli’s quick surge and fall at the end of Friday, today’s expected pattern was a sideways oscillation. But after a low open, the sector quickly moved higher and maintained oscillation above the zero line all day. Similarly, Jianjian Shares also stayed above the intraday moving average, indicating funds are willing to support. On Friday, Aerospace Development was not very active, and today’s late rally didn’t trigger other stocks. The old dragon is still weak. Some stocks that should weaken didn’t, but the old dragon’s move was unresponsive. The overall environment is good, but intra-sector rotation continues, with attempts at high-low switching. The sector isn’t ready for a full breakout yet. In the near future, US-China aerospace will enter a brief resonance period, with good expectations, including various launches planned for mid to late May. Among individual stocks, Xinwei Communications, which has been mentioned multiple times for its strong trend, performed well today. When funds try to do high-low switching, the key is recognition—among so many stocks, the movement of any is random, and it’s impossible to know which the main force will support. But we can choose stocks with higher probability and recognition, as funds tend to favor them. Recently, some core stocks at high levels show signs of stagnation; it’s best to wait for a series of divergence before considering entry.

4. Robotics
   Daye Co., as the top stock in the sector, was pushed higher by sector strength on Friday. Today, it needed to strengthen further. Although it opened high, it quickly declined after the open, and even though it tried to recover, it was hammered down. Despite being a low-priced stock, the sector’s positioning remains in the theme of technological divergence, serving as a short-term safe haven during tech sector fluctuations, similar to batteries. The sector tends to wait passively for tech divergence, expecting strength only when a top signal appears in the tech sector. Only then can robotics attract funds from the tech sector and sustain a rally, similar to last year’s market.

5. Financials
   Financial stocks have been active these days, likely driven by funds signaling their stance at this index level. There’s little risk at 4200 points, which can be held steadily. Today, as the index approached 4200, financial stocks immediately surged, lifting the index. This gives the impression that the index is inexplicably strong, but looking at sectors and individual stocks, the strength doesn’t fully match. It’s possible that before US-China talks, some face-saving measures are being taken to make the index look better. Regardless of the purpose, the index remains safe. This sector has good fundamentals and is at a low position. If it were other sectors, a rally might have already occurred, but it hasn’t. Currently, financials are mostly used as a tool for the index, with less potential for a new rally.

Every morning, I share news and core stock picks. Family members, pay attention to the artist, follow along, avoid confusion. The morning content is basically my market expectations for sectors!! Please like the post, and you can also tip points or cheer!

We’ve heard too many big principles and market theories. Many still don’t know how to implement them. So I share my “Strength Pyramid System,” which can bring growth to you and is worth your serious attention. Those who always want to get something for nothing will stay on the surface of trading forever. The original intention is to help those who follow this post not to be lost. But the market will evolve, and so will our “Strength Pyramid” system. In the future, as markets change dynamically, I will add new “dimensions” to it based on different market conditions, making it more adaptable to various cycles.