5/11 Review Notes

Today the index continued to open high and move higher, with trading volume increasing to 100k yuan, which is a clear breakout of price and volume together above 4200 points. This is a very good signal and trend. Last week, when energy reached 3 billion yuan, I said that was the best news, especially when the index is at a high level. If it cannot continue to increase volume and break through resistance in one go, then it’s likely to diverge again at high levels. As long as divergence occurs, the index may fall again. So in recent trading days, we’ve seen continuous volume increases, with volume maintained above 3 billion yuan, and today’s breakout above 4200 points is the best trend. [Taogu8]
Today’s good performers, without a doubt, are still the technology sector. Semiconductors, glass substrates, CPUs, and other sectors continue to open high and move higher. At the same time, the brokerage sector resisted pressure this afternoon. Starting at 2 pm, they launched a sustained attack, and even maintained the index at the close, with the index closing at 4225. This is an even better signal. Everyone should remember that when brokerages and other sectors work together, they can lift the index and keep it up. Today, brokerages performed well, and the sector also showed increased volume. A while ago, I sold Tianfeng Securities at a low point mainly because of poor earnings—really trash. After selling, I directly bought into a brokerage ETF. I believe there will be big changes in brokerages in the future. There are many brokerages in our country, and in the upcoming bull market, there will inevitably be clear differentiation. The top 20% of brokerages will earn huge profits, while smaller ones will be merged under local government guidance to consolidate resources—this is why Tianfeng Securities was recently promoted, and there was talk of merging with Changjiang Securities, since both are backed by Hubei state assets. But their quarterly reports are very different, so some say it’s better for Tianfeng to merge into Changjiang. That’s a good idea because if brokerages like Tianfeng can’t quickly improve their performance, then under local government-led mergers, it’s a good option. However, in the future, some smaller brokerages might suddenly perform poorly like Tianfeng. So small brokerages definitely carry risks. In the upcoming bull market, top brokerages will be able to earn huge profits—after all, they are the leading brokerages in a bull market. That’s why I sold Tianfeng at the low and bought into the brokerage ETF, optimistic about the revaluation of low-priced brokerages. Today’s volume breakout and steady hold above 4200 points again tell the market that this is a bull market. No need to doubt anymore. Now, the market is starting to oscillate upward. The long-term target is to break the 5178 resistance first; the short-term resistance is 4500 points. If it can break 4500, then 5178 will just be another step. That’s my personal view. Under this trend, low-priced brokerages are definitely set for a catch-up. That’s very likely. Currently, the brokerage sector is also at a low point, so it’s still a good choice. If you believe in a bull market, then brokerages now are cheap. But I don’t recommend buying small-cap brokerages, because there’s a risk of sudden earnings shocks like Tianfeng. ETFs are a better choice, or choosing top brokerages, but I think ETFs are safer.
Another point is the weekend news. Everyone should have seen that on May 9, the implementing regulations for the Mineral Resources Law were passed. Related stocks like rare earths and strategic metals rose sharply. Basically, this can be understood as an industry consolidation in mining. Small companies will find it hard to survive in this sector, while leading companies in various non-ferrous metals and mineral segments will become stronger, especially those controlled by state assets. Core rare minerals will be held by the state in the future. Additionally, some strategic reserves of rare metals are being established, similar to what the US has done before. The US planned to allocate hundreds of billions to stockpile rare metals because, with technological development, the prices of these rare strategic metals will inevitably rise from their low levels. I believe the first point is that our country’s metals are globally leading in reserves. We need to control their exports and avoid selling cheaply. It’s best to process them deeply and keep the profits domestically before exporting. The second point is that some metals are critical bottlenecks for our country—rare metals with low reserves. We need to accelerate procurement and stockpiling, creating strategic reserves to prevent other countries from choking us, like nickel. Indonesia is the world’s largest supplier, and everyone has to watch its policies. Recently, Indonesia has been restricting nickel exports through various measures, such as quota reductions. This is similar in other countries—everyone wants to maximize profits from these metals domestically. The era of exporting raw ores at low prices is over; no country will sell these strategic metals cheaply anymore. This trend will only intensify. Today afternoon, Indonesia announced plans to delay increases in mining rights fees and export taxes. When I first saw this, I didn’t care much because it’s normal. For strategic metals like nickel and lithium, if any country can still sell cheaply in 2026, it’s purely charity. Also, remember that restrictions from Indonesia or Zimbabwe are short-term negative but do not affect the long-term benefits for companies. For example, Zimbabwe’s export ban on lithium caused stocks like Shengxin Lithium and Yahua Group, which have mines there, to fall sharply—about 20% in a continuous correction. But looking back, Shengxin recovered after the correction and rose dozens of points. Such news is inevitable in the future, but short-term negative impacts do not affect long-term positives. When this news comes out, lithium carbonate prices surge, and Shengxin’s stock price also rebounds. That’s why short-term negatives don’t affect the long-term outlook. The same applies to Huayou. No matter what Indonesia does in the short term, nickel prices will oscillate upward. The more aggressive Indonesia is, the more nickel prices will rise. Ultimately, Huayou will benefit from the sharp rise in nickel prices, and today Goldman Sachs raised nickel prices again, from $17,200/ton to $18,500/ton. Since London nickel touched $20,000 on the 6th, it has corrected for two days. Today, the decline stopped. Recently, nickel inventories in the London Metal Exchange decreased by 948 tons, which is good news. That’s why I am optimistic about nickel continuing upward this year. London nickel has already broken through January’s high and started a sideways upward trend. Coupled with Huayou’s undervaluation, I see more opportunity than risk. So everyone can decide whether to buy or sell. I remain bullish, but I remind you to do your own research before making decisions. Don’t just follow what I say—my thoughts are just my personal analysis and may not be correct. If you can think further based on my analysis, your decision’s accuracy will be higher.
Salt Lake Shares today opened low and moved higher for lithium carbonate. Currently, three international banks have different views: Goldman Sachs expects lithium carbonate to fall below 100k yuan in the second half, while UBS and Morgan Stanley expect it to rise to 250,000 yuan. They’ve started a battle. But Goldman Sachs has been bearish since lithium carbonate was below 100,000 yuan—kind of funny, like missing out and then loudly bearish. My view remains: at 200,000 yuan, lithium carbonate is the most intense battleground—both support and resistance. The market’s sentiment is driven by news, which no one can predict. I don’t recommend participating at this level now. When lithium carbonate first reached 200,000, I suggested choosing other lithium raw material stocks, especially those still at low levels. Recently, lithium carbonate has been oscillating at high levels for three days, but Ganfeng, Salt Lake, and Shengxin have all corrected for three days. If negative news comes this week and prices fall below 190,000, these three stocks could see a big drop. So, this level is a balance of opportunity and risk. In the long run, the risk outweighs the opportunity. Lithium carbonate at 200,000 yuan isn’t cheap. Decide based on your risk tolerance—I personally don’t hold any.
Jinli Permanent Magnet, no need to sell, keep holding, including Northern Rare Earth. In my previous review notes, I mentioned that Northern Rare Earth’s price wasn’t expensive, and Jinli’s was also. The next day, they both surged. Recently, Jinli continued to rise significantly. Looking at the trend today, Jinli continued volume-driven upward movement, so no need to sell—just keep watching for oscillations upward.
Huaming Equipment, the past two days, bottomed out with volume accumulation. I think if you want to add some today, it’s fine.
Sany Heavy Industry, no need to sell. If it pulls back at the end of the day, adding some is okay. Also, if there’s a chance tomorrow to buy at a lower price, it’s fine to do so, because today’s volume was very high. The current oscillation upward should first break the 25 resistance. Just hold on.
Huayou Cobalt, check the trend on November 10, 2024. It first dropped from 38 to 27, a decline of over 40%, then rose back to 39, then fell again to 26, a decline of over 40%, and then started a new main upward wave. This shows that before a new wave begins, stocks usually go through big fluctuations—there’s no smooth sailing. If you can’t accept Huayou’s potential drop below 50, with over 30% correction, then you might consider selling now. My current position cost is 65 yuan, and I believe most of you are similar or even lower. I am prepared with ammunition and can accept the worst case—if it drops to 50, so what? I’ll just buy more on the dip. So I can accept a strong correction because I believe in it strongly. Whether you can accept it depends on your mindset. Recently, with high levels correcting for three days, many people are about to lose patience. The highest and lowest points during these three days are about 10% apart. If you can’t handle this correction, I suggest you sell. Otherwise, you might sleep poorly if it drops another 10%. No need to do that. You can buy stocks you believe in, avoiding the frustration of seeing other sectors like tech rise while Huayou or others fall. If you believe in a sector, sell stocks you’re less confident in and buy the ones you truly believe in. That way, whether you profit or lose, you won’t regret. I reiterate: I am bullish on Huayou and hold a large position. But whether you buy or not depends on yourself. Don’t blame me if you miss out on tech or other sectors after a correction. My style is to find good stocks at low levels and hold long-term. I don’t chase highs. This is just for your reference. Your account is in your own hands, not mine. Decide for yourself.
Regarding Huayou’s today’s trend: during the trading session, it quickly dropped to around 63 at 29, then rebounded sharply, retesting the low of the 29th. That was a sign that the main players’ chips are around that level. Today, again, volume surged, likely because retail investors saw tech sectors rallying strongly and sold Huayou to chase tech stocks. So, the volume increased again, which I see as good news. The more intense the shakeout, the higher the future rise.
Hengrui Medicine, adding some today is fine—whether you added at the start of the afternoon rally or at the end, it’s okay. Today’s volume was strong, basically ending the recent 15-day high-level correction. Although it didn’t dip back to 51, it fell to 52 and then rebounded. It also closed with a lower shadow and increased volume, showing a decent trend. If tomorrow’s opening continues to dip, I think adding at a lower level is fine. I didn’t let everyone add earlier, waiting for 51. Now that volume is there, you can add. Starting tomorrow, if there’s a dip during trading, I think you can add some. How much to add depends on the intraday trend.
Huadong Medicine, like Hengrui, also increased volume today. Starting tomorrow, adding at a dip is fine.
Zhongchong Shares, still no clear sign of stabilization or bottoming out, so no additional buying for now. Volume is there, but not enough.
Other stocks are not very volatile, so I won’t mention them. Today’s index volume exceeded 4200, and I maintain my view that it’s a sign of stabilization. From today onward, I expect oscillating upward, with the index first targeting 4500 points. Also, recently, the “yellow hair” (a nickname for a certain foreign politician) will come here to discuss cooperation. I can already imagine how he’ll post on Twitter after returning to China: “I had great talks with China! China bought us a lot of soybeans! We won big!” That’s basically the content. So, everyone can have this expectation: think about why “yellow hair” is coming. It’s definitely to promote US agricultural products and support his farmers, and also to ask China to relax some export restrictions on rare earths and other strategic materials. It’s a negotiation—both sides will talk. So, if you want to position for US-China talks, you can think along these lines and choose stocks accordingly. That’s all.