Hexun Information Wang Xinwen: Ten years to reach 4200 again! What should we pay attention to next?

The two markets’ total transaction volume reached 3.5 trillion yuan, setting a new high for the year, but signs of weakening momentum have already appeared in the leading sectors. The market rose from 3,700 points to 4,200 points, with trading volume expanding to 3.5 trillion yuan. Although the market appears strong and rising, there are two key abnormal signals hidden beneath the surface that require rational assessment of potential risks. First, in core hot sectors with significant gains such as optical modules and CPO, leading stocks are no longer able to reach new highs in this stage. Funds within these sectors continue to diverge, and the buying support at high levels is weakening, gradually loosening bullish consensus. Second, in previously high-positioned niche segments like computing power leasing and high-end AI computing power, core leaders are collectively stagnating, with high-level pressure becoming evident and funds showing a clear willingness to cash out.

The core analysis conclusion is clear: short-term gains have been sufficient, and the market urgently needs a period of divergence and volatility to complete the rotation and clearing of floating chips at high levels. After consolidating the support foundation, the market can further open up space for subsequent upward movement. Currently, it is not a time to be bearish on the overall market; the key is the shift in market rhythm, with no significant trend weakening risk. Based on the current high levels, reasonably controlling positions is more important than blindly chasing highs. Protecting existing certain profits is better than gambling on the inertia of the end-stage market. In the context of massive trading volume, future market competition will focus on the sustainability of long-term holdings rather than short-term explosive gains. Calmly responding to market divergences and patiently waiting for stabilization will enable investors to seize the next major upward opportunity.

The two markets have achieved an important breakthrough, with the Shanghai Composite Index surpassing 4,200 points, a level not touched in the past 10 years (since 2015), bringing back many investors’ “youthful memories.” Besides the Shanghai Composite reaching a new high, the ChiNext Index surged to 3,928 points, up 3.5%, and the STAR 50 Index soared 4.65%, hitting a record high. However, rationality must be maintained, and blind optimism avoided—over 2,000 stocks still declined that day. Misjudging the market direction could lead to losses even in a bull market. Moreover, the market was not smooth sailing; noticeable pullbacks occurred amid divergences, and Hong Kong stocks only barely closed in the green. Three major risk signals have emerged and require close attention.

First, capital flow shows a switch between high and low levels. The semiconductor sector saw significant net inflows, but high-level computing power leaders faced concentrated selling by major players, with Hengtong experiencing a net outflow of 35k yuan, Unigroup 35k yuan, and Xinyi 2.49B yuan. Stocks like Cambrian and Inspur also saw substantial reductions. Second, the momentum for consecutive daily limit-ups has cooled significantly, with many leading stocks in the commercial aerospace sector breaking their limits, including Mantis, Bodao, and Daye, which all failed to sustain gains and fell back sharply. The success rate of consecutive limit-ups is less than 40%. Third, multiple indices’ intraday charts show high-level divergence, indicating ongoing short-term adjustment pressures.

These signals suggest that the overall market trend remains unchanged, but divergence is intensifying. Stocks that have accelerated continuously at high levels have become windows for major players to offload holdings, and are not suitable for retail investors to jump in now. Focus should be on sectors where funds still have appetite after divergence. Specific attention should be paid to five core directions, with emphasis on: 1) Focusing on “choke points” such as domestic substitution chips, semiconductor computing and storage, advanced packaging, and PCB, which are the current core themes; 2) Monitoring price increase logic, as demand for electronic materials and storage particles is clear, and the upward trend is sustainable; 3) Investing around shortage areas, as global storage chips are experiencing the most severe shortage in 15 years, with the market outlook extending at least to 2027; 4) Extending into the power sector along the computing power industry chain—power supply, AI servers, data centers, and lithography factories all require substantial electricity, and with peak electricity demand approaching, funds are already rushing into the power sector, so uninitiated power targets should be closely watched; 5) Supporting the upward trend of the index—large financials. When the semiconductor sector surged and then retreated in the morning, it was the large financial sector that drove the market higher. The strength or weakness of large financials directly determines whether the index can continue to break through. It’s crucial not to focus solely on the tech sector and ignore the support role of financials.

Future key points to monitor include: 1) Whether the Shanghai Composite Index can hold above 4,200 points and solidify support; 2) Whether the trading volume can stay above 3 trillion yuan to ensure market sustainability; 3) Whether large financials and semiconductor sectors can avoid simultaneous weakness and form a joint support for the market. For investors who missed the opportunity, there is no need to panic—there will not be only one chance to enter the market in this big bull run, but it also won’t wait for the hesitant. Wishing all investors success in this decade-high bull market and to harvest their own wealth.

(Edited by: Zhang Yang HN080)

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