5.14 Review: After a brief rebound, the index surged then sharply declined; although hardware showed resistance, volatility increased, and rotation accelerated.

Yesterday’s index strength exceeded expectations but turned out to be a false signal of a trap! Today, the market volume surged over 3.36T yuan, with the three major indices closing with large downward lines, over 4,100 stocks drifting into the red, heading straight to emotional lows. Silicon chip and silicon carbide at low levels switched, optical communication stubbornly resisted declines, while the power sector collectively weakened and reversed, short-term sentiment retreated early, leading stocks hit the limit and large declines everywhere. Even if trying to bottom fish, one must first prepare defensively. [Taogu Ba]

Following the Trend
Yesterday’s unexpectedly strong index was the last bounce before a retreat, with the morning index opening slightly higher on increased volume, which was somewhat misleading. But after the open, the index slid without resistance, and in the afternoon, driven by a rebound in optical communication, the decline narrowed temporarily, but ultimately it plunged again, with all three major indices closing with large downward lines, and the Shanghai Composite falling below 4,200. The total market turnover was 3.36T yuan, with an increase of 122.2B yuan. Under the volume decline, the probability of a short-term top is relatively high, and the market is shifting into a correction phase.

On the thematic level, today’s previously strong sectors collectively entered correction, with a fermentation of a silicon carbide niche in chips, and optical communication and liquid cooling showing some resistance.
Throughout the day, 13 related stocks hit the daily limit, with a total increase of 15.59B yuan, Hefei Urban Construction hit 3 limits, China Shipbuilding Special Gas hit 2, and 11 stocks hit the first limit, including 10 silicon carbide stocks, with a total of 9.32B yuan, all at the first limit. While the sector showed some resistance, more was shifting to lower levels.
In hardware, 11 stocks hit the limit, amounting to 14.51B yuan, including 6 optical communication stocks, with 3 limits, Kawai Technology with 2 limits, and Huawang Shares with 2 limits. Other liquid cooling-related stocks hit 5 limits, including Huashengchang, Jinfang, and Kelik, with 2 limits each, and 2 stocks at the first limit. Hardware showed some resistance throughout the day, but internal shifts and differentiation between high and low levels existed. Optical communication was especially resilient, with Zhongji’s contrarian rise in the afternoon having a certain influence on both the index and themes. The correction in Yunnan, Dongshan, and others was relatively mild, with Huashengchang, Guangxun, and Yongding maintaining strong momentum.
Yesterday, the power sector was strong enough to compete with hardware, but today’s feedback was below expectations. Most of the leading stocks hit the limit or failed to open, and after the leader Datang hit the limit and then jumped in the late session, it gave negative feedback. Restoring confidence will likely be more difficult.

Market Sentiment Fluctuations
The market shifted from hot to cold. Today’s key point was that the decline was accompanied by volume. Over 4,100 stocks in both markets closed lower, with only about 1,000 stocks rising, approaching the ice point data. Both the Shanghai and Shenzhen indices broke below the 5-day moving average, and now it depends on the support of the 10-day moving average.
Speculative sentiment retreated before the index, with Fuda Alloy, which was under regulatory scrutiny yesterday, quickly falling to the limit in the morning. Copper Crown, Shengyang, Great Wall, and other sentiment carriers collectively weakened. Compared to the moderate trend adjustment, the sell-off driven by sentiment was more extreme. Shaoneng Shares hit the limit at the open, and Datang also closed below, resulting in large declines.

Tomorrow’s Reflection
The confidence that was just ignited yesterday was extinguished today. After volume-driven declines, there is usually some inertia for further downward movement, but similar to the late-session buying, today’s late rebound also caused some overextension. If tomorrow’s open sees further declines, selling pressure may further decrease, possibly triggering bottom-fishing behavior.
The key point remains whether sentiment can continue to retreat. Datang failed to break through further today and instead weakened voluntarily. If tomorrow continues to see sharp declines, the sentiment situation will become more severe.
So, there are two approaches for tomorrow: one is to observe the trend of active sectors during the correction, as some sectors have relatively good trend structures and showed clear resistance today; if the market rebounds, they are more likely to strengthen.
The other is the sentiment direction—if Datang can hold, then the group confidence might continue, especially for Jin Tanglang, as long as it doesn’t underperform further, capital confidence will persist.
Overall, with the index peaking in the short term, the market will become chaotic, with large fluctuations and rapid rotation, so defensive measures are necessary. Keep positions small or focus on watching rather than overtrading.

Trading Insights
In the retreat, uncertainties remain, and today’s trading was a mix of gains and losses.
First, regarding holdings, China Great Wall and Huaneng Liaoning were sold off immediately at the open, which was a timely response. I was subjective about Datang, adding some at 8 a.m. and again at 3 p.m. during the pullback. When it clearly weakened in the afternoon, I liquidated all my positions above 4 p.m.
I opened three new positions: Hefei Urban Construction bought at 7 a.m. as a low-level chip rebound, still hitting the limit; Runjian Shares bought around 7 a.m., but it failed to hold and fell back, resulting in a loss of over 8 points.
I also bought two stocks at below -4 and -7 levels in batches—Jintanglang—ending the day with a profit of over 6 points.

Post-market holdings: Datang Power, Hefei Urban Construction, Jintanglang, Runjian Shares.

Data Summary

☑ Statement: The above is only a personal review note. Any opinions or individual stocks mentioned are for illustration purposes only and do not constitute investment advice. Please do not blindly follow the trend. Trading involves risks; invest cautiously!
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