[Red envelope] Bull markets often see sharp drops; cherish the chips in your hands. Appendix: Next week's market outlook

If you miss the sunrise at 5 a.m., you might as well catch the sunset at 6 p.m. What we spend our entire lives pursuing is the life we desire and the ideal version of ourselves. It's okay to take detours or spend a long time—you don't have to live up to others' expectations. As long as you keep moving, it's enough to be on the path to becoming yourself.

As usual, one sentence to sum up the market:
CPO and optical fibers led the decline due to negative news, while electronic cloth and glass substrates bucked the trend to lead gains. Memory chips showed resilience by resisting declines throughout the day. The ChiNext and STAR Market both fell sharply, and securities gave up resistance, dragging the market down together. The market closed at 3.55 trillion yuan. Is the tech sector turning back to pick up passengers, or is this the last chance to escape? Let's dive into today's review with this question in mind.

Back to the market: Before the market opened, I reminded everyone to be ready for divergence and to proactively sell high, as risks were accumulating.

At the open, the CPO sector opened lower, with optical fibers leading the downturn and amplifying divergence. Hengtong Optic-Electric and ZTT hit the limit down after opening low and moving lower, while the "Yi-Zhong-Tian" trio collectively sold off. The market likely believed that Corning's newly announced glass technology would eat into the market share of optical fibers.

Then, capital rotated and pushed up glass substrates. Red Star Development reversed and rose, BOE and Woguo Optoelectronics hit the daily limit during the session, and Gobi Qi on the Beijing Stock Exchange surged before being dragged down by CPO and optical fibers. In early trading, some capital attacked the electronic cloth sector. Guoxji Fucai soared, while Honshi Technology and China Jushi rose, but the ChiNext and STAR Market suffered heavy losses, eventually dragging all tech stocks down.

In the afternoon, semiconductors rallied to repair the ChiNext and STAR Market. Organosilicon in the silicon wafer sector hit the 20% daily limit, and target material company Youyan New Material touched the limit. Semiconductor equipment makers Fuchuang Precision and Zhengfan Technology hit the 20% daily limit. Toward the close, memory chip stock Demingli hit the limit but was then sold off.

During the day, the semiconductor sector was relatively strong, but the STAR 50 and ChiNext both fell sharply, indicating severe internal divergence within the tech sector. You not only need to choose the right direction but also the right stocks. This is quite difficult for ordinary investors, so ETFs are the best choice.

For example, the STAR Chip ETF, Communications ETF, etc. When the market rises, you won't miss out; when it falls, you can hold on because low prices are a natural advantage.

In terms of sentiment, it's been weak recently. First, Zhongchuan Special Gas was suspended for the second time, then Junzhong Technology was halted, and newly regulated Lihongxin opened sharply lower. Many connected-limit stocks also issued clarification announcements. For instance, Xingye Technology, after six consecutive limit ups, announced that further rises would trigger a suspension. The authorities' stance is clearly to cool down the market, so controlling abnormal price movements will remain the mainstream strategy going forward.

For example, Fenghua High-Tech is controlling its price movement to avoid a doubling within 30 days, and it is about to exit the observation period. Whether this presents an opportunity or risk should be clear by now.

Index level: The ChiNext retraced to the 10-day moving average, the STAR 50 retraced to the 5-day moving average, the Shanghai Composite filled the gap at 4008, and the All-Share Index is approaching its previous low. All major indices have pulled back. Under normal patterns, this should be a point of focus, but it's not advisable to take heavy positions because the short-term rhythm is a bit unclear here. I often say: Global tech is one family—by day, we watch the Korean index; by night, the US market. The Korean index has been volatile recently, and on the other hand, AI is getting crowded.

The A-share market is currently expected to consolidate sideways. If there is another sharp drop, muster the courage to increase focus. Once it rallies, sell off your bottom positions. If it fluctuates mildly, keep positions under 50%, focus on stocks with solid fundamentals and high trading volume, and quickly exit those that are just riding the hype. Trend is king!

Personally, I am staying long on the chip sector, spreading into electronic cloth, glass substrates, and MLCC as the main allocation.

The above views are solely my personal opinion and do not constitute any investment advice. Trading based on this is at your own risk.

Finally, thank you to all my brothers and sisters for your support and fuel tickets.