During the ebbing process, small-cycle trading opportunities are gestating. Watch for second-wave structure varieties.

[Taoguba]
The index performed even weaker today than expected. In the afternoon session, it did not continue the trend of divergence turning into repair seen in the morning. Holders kept fleeing, while off-market capital remained on the sidelines, making the repair unsustainable. A wave of panic selling needs to be triggered here. All three major indices and sectors have broken support levels. The cycle is still receding. In terms of sectors, PCB and CPO saw larger declines, while the memory direction showed stronger resilience. If a rebound occurs, memory is likely to perform better. Conversely, some oversold low-position sectors showed activity. The pharmaceutical sector saw a morning rally, but this direction had already moved too openly in the previous rotation from high to low, so any uptick would be met with profit-taking. Consumer, tourism, and real estate sectors have some expectation gaps. Kweichow Moutai has already fallen to the price at the start of the 2024 bull run, essentially hitting the bottom. Once positive news emerges, there will be a wave of upward movement. The brokerage sector, often called a "player," is on a five-day losing streak. After helping the tech sector complete its distribution, funds have abandoned it. This direction will only act again when the next major cycle begins. Today, while observing the market, I noticed signals of a minor cycle starting. If a minor cycle emerges during this retreat, the next major cycle will likely not arrive until late August. The tech sector has a massive capital base, requiring time to exit.

The tech sector failed to achieve the expected repair today. It only briefly showed a divergence-to-repair move in early trading, but by the afternoon, buyers showed little interest, indicating that off-market capital still views tech valuations as somewhat high, not yet offering good risk-reward. If another wave of selling occurs tomorrow morning but fails to trigger panic stops, the downturn could extend another day or two. If panic selling does occur, a repair rally is likely. For holders, every repair rally is an exit opportunity. Early-stage high-identification oversold stocks may show near-term performance. When tech declines, funds might rotate into oversold bounces, like Huadian Liaoning Energy or Xiangjiang Holding. Consumer and real estate directions are not yet at their starting point, so attention should focus on the potential minor cycle that the market might connect to. On individual stocks, as noted in yesterday's review, if after this cycle's retreat, capital cannot form consensus and resonate at the next level, then the leftover funds from the old cycle will likely create a minor cycle to bridge the gap. Special attention should be paid to second-wave structure stocks, as they have structural foundations and strong capital consensus, making it easier to reach highs. Today, during morning trading, I spotted Xingye Co., Ltd. (兴业股份), which has good recognition. If it advances to the second board tomorrow, I would consider taking a small position. This is a trial for the minor cycle connecting during the tech sector's major retreat. There's also Zhongbai Group (中百集团) in the consumer direction. I had considered taking a first-mover position yesterday but held off. The stock shows clear capital entry, but the timing isn't right yet. However, if consumer and the index resonate later, this stock will definitely be one of the more recognizable names. On the tech side, JCET Group (长电科技) is following yesterday's projection. The other few stocks—GigaDevice (兆易创新), Kingboard Chemical (金安国纪), Shenzhen Hua Zheng New Material (华正新材), and Wuxi Taiji Industry (太极实业)—have all broken support levels and look bad. Those not looking for bounce plays can ignore them for now. As the trend recedes, short-term trading is likely to perform. Recently, small-cap stocks have been outperforming large caps. To revive the short-term trading ecosystem, a stock needs to step up and break the pattern. I personally favor the short-term market outlook. It is necessary to first pull a minor cycle to test regulatory attitude. Hengshang Energy Saving (恒尚节能) will probably top at 8 boards tomorrow, but we definitely should not chase it. Daheng Technology (大恒科技) will likely lose its board tomorrow—no recognition, no expectation gap, poor structure, not worth considering. Mvision Technology (魅视科技) fits the second-wave structure, but its price is a bit high. The remaining second-wave stocks are only Xingye Co., Ltd., Xingye Technology (兴业科技), and E-Dragon (易德龙). Xingye Technology is priced high with some gap in chip holdings, not worth considering. Same for E-Dragon—high price is inconvenient for pulling a rally in short-term trading.

To summarize, tech is receding; the overall rhythm has more divergence than repair, making it hard to trade. I choose to avoid it. Trend is weakening, small caps are strengthening. I personally favor the short-term market outlook. Focus on low positions. Tomorrow, I will try to catch the second-wave leader of the minor cycle. Xingye Co., Ltd. is a good candidate. I will observe it closely tomorrow. Normal expectation is a small gap-up open, then a rally to limit-up, followed by a board open for turnover. When the first limit-up comes, I may queue to buy.

Stick to the system; ignore other directions for now. I will update thoughts after deep evening review. May all brothers and sisters enjoy a smooth ride!