Get ready for a structural transformation

Today, a classmate from out of town came to visit, and we arranged to have dinner tonight, but the location is quite far away, so I need to leave early to get there. Today, I’ll keep it brief and mainly express a few points. [Taogu Ba]

1. Index

You can see that since the low point of the US-Iran conflict, the oscillating rebound has been ongoing, and today marks exactly the 34th day. This oscillating rebound structure has entered a 34-day time window, which indeed suggests a possible structural change. Yesterday, the index tested the bottom and rebounded, and the gap from May 11th was not filled, so the breakout of this gap is considered valid and effective. However, today, the market was directly countered by a long lower shadow, invalidating that. So, a timely correction is needed. Since the gap has been filled here, and after yesterday’s bottoming and rebound, there was no further strengthening today, at least the structure here might shift from the previous oscillating upward trend to a sideways consolidation range.

In other words, the previous expectation for the index was a breakout above 4200 followed by continued main upward movement, but based on today’s performance, even if the main upward trend continues, it’s more likely to be in the form of oscillation, with a possibility of forming a sideways box. The outlook has changed, so please pay attention to this.

2. Then, what everyone is more concerned about is China Great Wall’s limit-down today. Indeed, hitting the limit down isn’t great, but it’s understandable. A few days ago, everyone should have noticed that Great Wall was not only at the top of the popularity list but also among the top few, indicating that a large amount of short-term emotional funds participated. Once these emotional funds exit, a limit-down is not surprising.

However, a single day’s limit-down movement doesn’t actually break the trend, and today there was no liquidity exhaustion. During the session, the stock repeatedly fluctuated, opening and closing, with trading volume roughly the same as yesterday, indicating that institutional funds are providing liquidity for emotional funds to exit. They just didn’t give a particularly good entry point. Today’s movement, besides emotional funds fleeing, also shows that the frequent T+0 trading by LYB (short-term traders) has basically ended in failure. Since LYB’s T+0 trading has failed, they will likely gradually withdraw, making the chips cleaner.

Next, it depends on the attitude of the on-market funds. If they want to continue short-term trading, they must hold the 10-day moving average. A slight dip below it tomorrow is acceptable, as long as they can recover it the day after. But if the 10-day line breaks tomorrow and the market doesn’t bounce back by the opening on the day after, then the attitude of the funds will be that the strong trend has ended, and they won’t continue for now. The next wave might have to wait until the 20-day moving average is retested, and then they can exit if needed.

3. The last point is very important: if the index indeed consolidates sideways, then large-scale strength in institutional trend stocks is unlikely, and rotation will be the main driver to maintain the index’s sideways movement. Meanwhile, thematic sectors will show some performance. Are there any promising thematic directions now? Yes, there is one: Token factories and computing power futures. Although fundamentally related to computing power, their levels are different. Especially with the computing power futures event, it marks a shift of computing power from a purely industrial cost resource to a financial product. When crude oil shifted from industrial energy to a financial product back then, it also experienced a big rise. Whether it’s Token factories or computing power futures, both have ongoing news fermentation expected, so keep an eye on them.

Last year, around late May, after a rebound in the index, it entered a sideways consolidation. At that time, a financial product was introduced as a theme—do you remember stablecoins? A cycle of Hegao (a stablecoin project) emerged. Who will be the Hegao this year? If the mantis and Liaoneng (companies) confirm the end of their consolidation and vacate their positions, new players should emerge. Let’s see who they are.

Today, I mainly wanted to share these points. I need to head out now. Lastly, thanks to everyone who rewarded Dao Ge yesterday!

Long Yi @ Honest Clothing Accessories and Lining 3000 points

Long Er @ Sitting and suddenly Enlightening 1100 points

Long San and Long Si @ horse1010 @ Qianlong Family 1000 points

Also, thanks to everyone cheering for Dao Ge!

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【Disclaimer】: All stocks mentioned in this article are for observation and research exchange only and do not constitute any investment advice. The stock market carries risks; please trade cautiously!