The second half of the month is always more difficult!

Yesterday’s article mentioned that the rapid acceleration of technological market rally has made the slope too steep, and the market is also accelerating. The national team ETF has appeared again to control the market, so I reduced my positions, gradually withdrawing while fighting, specifically controlling to about 70% of my holdings.

Today’s trend is in line with expectations, with the market experiencing a relatively deep decline. Ultimately, the Shanghai Composite Index fell below 4,200 points, and the Shenzhen Component and ChiNext indices dropped over 2%. Most stocks in the market declined, with over 4,300 stocks falling. The total daily turnover was 3.33 trillion yuan, with a volume increase of 124.2 billion yuan compared to the previous day. Main domestic capital net sold 174 billion yuan, and the median of gains and losses was -2.04%. In terms of sectors, only a few industries rose, including liquor, food and beverages, banking, and decoration building materials.

Technology and semiconductors showed divergence, with some stocks soaring and others falling. Stocks like Jing Sheng Co., Zheng Fan Technology, and others hit the daily limit. Concepts such as fiber optics, optical modules, silicon carbide, and glass substrates repeatedly gained activity, with Chuanzhou Technology and Huilu Ecological hitting the limit. However, concepts like liquid cooling, PCB, cloud computing, state-owned cloud, Huawei Euler, Huawei Ascend, and the East Data West Computing saw significant declines. Shenghong Technology and South Asia New Materials fell more than 7%. In terms of decline, energy metals and minor metals sectors oscillated downward, power grid equipment continued to weaken, cultural media and gaming sectors declined, with Chinese Online approaching the limit down, Kunlun Wanfeng and Nanwei Software fell over 7%. The military industry and commercial aerospace sectors continued to decline, with Electric Science and Blue Sky, China Satellite hitting the limit down or falling more than 10%. Additionally, real estate, gas turbines, and medical healthcare sectors performed poorly. Regarding news, China and the US held talks, Tencent, Alibaba, and ByteDance collectively announced that they will further increase AI capital expenditure this year. The global demand for humanoid robots is booming, with 8 out of every 10 humanoid robots coming from China. Blue Arrow Aerospace’s Zhuque-2 satellite successfully launched the Yao-5, breaking through the high-orbit capacity bottleneck for private rockets. Due to rising crude oil prices and increased downstream inventory demand, institutions show that in Q1 2026, the prices of several chemical products increased by over 100%. [Taoguba]
The overall market transaction volume remains above 3.3 trillion yuan. The medium- to long-term trend in the current market remains optimistic. In the short term, it would be more favorable for the market if it consolidates around 4,118-4,200 points.
Therefore, trading operations should mainly focus on observation and defense. Currently, the first half of the month is easier to trade, while the second half is more challenging, so caution is needed in the latter half, which is also a reason for reducing positions for defense.
Let’s look at the official results of China-US negotiations, as they will have a significant impact on the market moving forward.
Today still yielded some gains, which is quite rare.

I hope individual stocks can give opportunities to connect with the 5-day or 10-day moving averages. When gains are too high, they will pull back. Many stocks have rallied for seven or eight days, with ten or more positive days, so natural adjustments are expected after such acceleration.