[Red envelope] Current views on the market: sticking to the tech main line and weighing the cost-effectiveness of low-position directions.

Good weekend, everyone! [TaoGuBa]

So far in July, there have only been 3 trading days. Though it's short, honestly, the market has been grinding. I'm also stuck by the situation—my storage holdings have been trapped for two days. The index is hovering around the 4,000-point level, indecisive between up and down. The battle on the chart is even more intense: on one side, tech stocks that had skyrocketed earlier saw some large caps rebound on Friday after a big drop—like Demingli hitting the daily limit but then breaking; on the other side, sectors like robotics, innovative drugs, and non-ferrous metals, which had been falling for a long time, suddenly emerged collectively and strengthened. As for funds, they are hesitating between high-position and low-position stocks, unsure where to push. The bulls and bears are arm-wrestling every day, with neither side gaining a clear advantage, and neither willing to concede.

Currently, the market lacks conditions for a sustained rally or a major decline. It's in a phase of oscillation for bottom-building and sector rotation for repair. From the perspectives of fund flows, sector positioning, earnings expectations, and holding risks, I'll briefly share my views, clarify the logic of the current market, and then discuss where attention should be directed in July and even the rest of the year.

1. First, let's talk about tech stocks: What is the nature of this round of correction and rebound?

This correction in tech is entirely a normal pullback after a big run—not due to any major industry issues, let alone the end of the AI trend. For tech to end, there would need to be only one condition, not that AI is over or done. Something similar happened last week: Meta started selling computing power, and Zuckerberg said AI development fell short of expectations, causing a market sell-off. Then over the weekend, it was said they were going to customize chips with Samsung. These rumors must have been deliberately driven by someone. In plain English, the previous rally was too fierce, and the higher-ups wanted to cool it down. Combined with circulating stories like "earnings reports will be delayed," panic was amplified. It's a relatively violent washout during an uptrend, but the medium-to-long-term bullish trend for tech hasn't actually changed.

You see, during the worst of the drop, those tech giants with hundreds of billions in market cap were slammed to the limit-down board, with funds fleeing for their lives. In the past two days of rebound, these same large caps have pulled back significantly with a big bullish candle, showing clear characteristics of oversold repair.

However, if you look closely at the chart details, you can feel the contradictory sentiment among funds. Everyone wants to buy the dip, but they lack confidence and dare not go all in, making the bullish force appear weak. Many tech stocks closed with long lower wicks today—meaning they dipped during the session and then recovered a bit, but chickened out halfway, not daring to surge or even close at the limit. Our Taiji Industry is a case in point. What does this indicate? It shows that bullish funds in tech are still wary of high levels. This position needs time to digest trapped positions and gradually calm panic. For some time ahead, tech stocks will likely oscillate to build a bottom—no need to rush. However, within certain tech sub-sectors, new highs will continue to emerge, such as newer tech sub-sectors and branches that haven't risen much earlier.

Looking at the 4,000-point level, the intention of the authorities is clear: first, they cannot allow tech to surge alone and drive the index too high while other stocks lie flat—that would be too risky; second, the index cannot fall too deeply, as there is clear support near 4,000. So, with constraints on both ends, the index can only oscillate in this range, and sector rotation is the main theme for July.

2. Next, let's talk about robotics: Why did it suddenly erupt? Is it worth chasing?

Yesterday, the robotics sector was indeed strong, with dozens of stocks hitting the daily limit. I envied those who held them. But if we break it down, among those dozens of limit-up stocks, except for a very few that hit new highs, like Estun, most are what? They are oversold rebound plays that have been falling for over half a year and are stuck deep in a pit (e.g., Riying Electronics). The trapped positions above are far away, and holders who are down 40-50% have long given up. So when outside funds pull them, there's very little selling pressure, and limit-ups come easily.

What does this show? It indicates that some funds are now flowing out of highly volatile tech stocks and specifically targeting long-term oversold tracks with sufficiently low positions. Robotics is a typical example; innovative drugs, non-ferrous metals, and chemicals are also following the same path. The high-to-low rotation pattern is now very clear.

So this wave in robotics is more of a low-position repair rally and does not yet have the conditions to fully replace tech as the leader. In the long run, this track definitely has a story, but don't get too excited in the short term. If you want to participate, pick stocks with real technology and gradually build positions on pullbacks—don't chase consecutive limit-ups.

3. Another dimension to measure is cost-effectiveness. This also explains why the market is behaving this way.

Tech stocks are now at high levels—that's a fact. For high-position sectors to continue rising, they must be supported by solid earnings. Fortunately, some sub-sectors within tech are indeed impressive, such as optical modules, semiconductor materials and equipment, where orders are overflowing and mid-term reports are likely to exceed expectations. Even more exaggerated is our storage stock, Jiang Bo Long, whose half-year earnings surged up to 744 times—that's insane. With earnings, there's confidence, even at high levels.

On the other hand, robotics, innovative drugs, and non-ferrous metals have been falling for a long time, with valuations compressed to the floor. Their advantage is cheapness, and cheapness is a hard truth. Short-term earnings may not be as explosive as tech, but as soon as a positive catalyst appears, the space to bounce off the floor exists. So high-position tech and low-position sectors each have their merits. It's not an either-or choice; you can combine them. Black cat, white cat, as long as it catches mice, it's a good cat.

4. Now about risk—the core is: how comfortable it feels to hold.

Tech's biggest risk right now is not that the industry is failing, but that after prices have risen so much, people feel uneasy holding them. Many popular tech stocks have already multiplied dozens of times, with share prices in three digits, or even four digits—who can handle that? Many students struggle to afford even one lot. The higher they go, the more they detach from the masses. Once the foundation is shaken, a correction is inevitable.

Low-position stocks don't have this problem. If you bought a robotics stock at 3 yuan, how low can it drop? There are few profit-taking positions to dump on you. Holding them feels stable and your mindset is steady. So from this perspective, allocating a bit to low-position tracks to hedge account fluctuations is very necessary.

We are bullish on the tech main line, but we won't blindly follow emotions. Because my philosophy has always been: follow whoever is strong and go wherever the action is.

Next, let me discuss my operational thoughts for the rest of the year and beyond.

I've been on TaoGuBa for nearly 4 months now, and my trading system has been adjusted along with the market. Sometimes the market favors small-cap consecutive limit-up stocks, sometimes it's easier to trade mid-cap trends, and sometimes it's all about oversold rebounds. Believe me, classmates, there is no holy grail. When tech trends are good, people making money from holding positions think they've found the grail—they haven't. Money earned in a bull market, if not cashed out or the account closed, will eventually go back. For most people, this is the consequence of lacking a trading system and merely profiting from the market's bull momentum.

Over these 4 months, stability has been tested. From the initial Jinkai New Energy and Xiexin brothers, to Huadian Liaoneng, Shengyang Co., Datang Power, and countless Shenlong cases, the final feedback is stability. This is due to our strategy system being grounded in the market. We also freeze and eliminate strategies that no longer fit the market, like the Chenglong Strategy for chasing leading consecutive limit-ups—there's no such environment now, and each attempt is heartbreaking, so why bother? The three strategies that remain and fit the market well are: Shenlong Strategy, Shenglong Strategy, and Huilong Strategy.

Going forward, based on these three strategies, we will strictly select candidates. We don't need to trade every day; fewer trades with higher probability are better. The ad hoc intraday situations of the past will no longer exist. The group stage is over; the knockout round begins. Every trade must be treated with utmost care.

I continue to look forward to a stable and bright future!

Thanks to the classmates who have tipped and boosted the posts recently:

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@sy时光流逝

Disclaimer: This article is only a record of my own operations. Investing involves risks, and trading requires caution. The content reflects personal thoughts and records, serving as my own understanding of the market. It is for personal sharing only and does not constitute any investment advice. It is for reference only. Any trading based on this is at your own risk.