If you were to encounter market conditions like Monday, Tuesday, and Wednesday this week again, how would you respond?

This week was actually very difficult. From Monday, Tuesday, and Wednesday, the market was so tough that even a guy like “A Ma” wouldn’t recognize it. And on top of that, with no clear main line, there were also sectors that ended up坑ing people. [Taoguba]
If you run into market conditions like early this week again, how would you respond?

1. Select individual stocks
2. Manage position size
3. Slow down the pace

In the end, it’s just these three methods. For “1. Select individual stocks,” in the same market where implementation happens, the difficulty coefficient for selecting stocks is even higher than usual. And the stock-selection team also needs to pick the precise timing—which is even harder. If you cut losses on Wednesday for the tech sector, then on Thursday—yesterday—you ended up chasing highs again. Obviously, in terms of node-by-node pacing, stock selection is already tough, and it becomes even tougher. Foreseeing is important, sure, but when it comes down to “foreseeing only has two outcomes—right or wrong,” then correcting by following the tape is what makes the “foreseeing plan” more targeted. Otherwise, if you don’t follow the market, your “forecasts” are just YY. I believe many people before Thursday already thought big tech was finished and didn’t need to watch anymore. But what’s the reality?

So, selecting both the individual stocks and the specific selection timing (pace) is equally important—if anything, the timing pace is slightly more important. Take Huatian Technology: even a day’s difference makes it worlds apart. The same goes for Baoding Technology: the day before you hit the board, and today you hit the board—there’s a 25% difference!

Now, about “2. Position management.” I’ve always said that splitting into smaller lots is the most effective and controllable approach. The key is how to split into lots, and how to pay attention in batches. For example, if you like a stock that’s already up 4% intraday, then you can buy the first lot without thinking too much—but you also need to leave room. If it pulls back to 1%, then you buy another lot. Watching by this kind of intraday-scaling approach is often safer. In weak markets, splitting lots can save your life; in strong markets, splitting lots will be slower. But overall, as long as your split-lot positions don’t cause sector conflicts within your account, they’re generally okay.

If you buy tech, and then within the same account you also trade healthcare based on anticipated rotation, you might buy some of both. Then when tech surges hard, the healthcare position won’t move, and since it doesn’t move today, it could still move tomorrow—so in split-lot execution, patience is slightly more important. People with no patience who like chasing highs and killing lows aren’t suitable for having positions in the account that “cause sector conflicts.” This is crucial. Sometimes in a big surge market, you get one big up move, one big down move, and it’s like drinking plain boiled water all day. Then you get ruthless and cut it—then the rotation happens the next day. MLGB! So splitting lots is actually the more important “discipline.” Generally, if we focus on the main line big tech, then find core stocks within big tech and split within that; don’t pair big tech with a bit of healthcare and a bit of robots—that’s not good.

Therefore, in terms of position sizing, it’s recommended to stay focused on a particular sector for splitting—for example, if you think today big tech is in disagreement, and next Monday big tech expectations will repair, then split positions within big tech. Similarly, if you think next week robots and healthcare will rotate, then allocate the positions to healthcare or robots, and just wait for the rotation.

As for “3. Slow down the pace,” in fact, very few people can stay in cash for a long time on pace. The DA index usually has three consecutive red/declining days. If the first three days of this week fell more than expected, then normally you could be flat for the first two days, but on the third day you can’t keep staying flat. Otherwise, waiting for the absolute right-side signal easily turns into chasing highs. That’s why I keep saying: when the index has two consecutive down days, you can basically start acting. Three consecutive down days is beyond expectations—this week it truly was like that.

------------------- Back to the market -------------------
If market conditions like early this week appear again, besides the above experience of 1, 2, 3, what else should you pay attention to? And how would you respond?

First, let’s do a simple pre-judgment: will next week replicate the index behavior of Monday, Tuesday, and Wednesday this week? Could it be another three consecutive down days? In fact, it’s a bit hard to get another three consecutive down days, because:

Today’s index is very similar to May 29 of the same day. Basically:
5.29 opened high, sold off into the close, and saw volume expand;
7.10 opened high and ran up, then dipped sharply at the end of the day, with volume expanding;
Today’s index dipped—there’s a reason for that. In the afternoon, there was a sudden text/speech-related development in commercial aerospace, and the sector suddenly surged in a straight line. That scared the capacity shares of big tech, creating capacity-related selling pressure, which in turn messed up the intraday tape of individual stocks.

Because now, the index’s weighting is being hijacked by technology stocks worth “super hundred billion” and “several thousand billion.” The float is huge, and the weight is huge.” So once the index is positively correlated with tech, when the index sells off, at the root it’s the commercial aerospace scare. If you really want to find someone to blame, then blame commercial aerospace. Also, Friday had factors too.

As shown in the chart above: if today’s pattern is the same as 5.29—then normally the index should repair quickly, and the probability of another three-consecutive-down market is extremely low.

Since this judgment applies, it’s certainly possible that big tech will flow back on Monday or Tuesday next week. Of course, after emotional panic, if some high-level stocks repair, you still need to pay attention to selling pressure and follow-through. If the follow-through is strong, then after Monday you get a bullish engulfing/positive back-to-back pattern, and tech still has continuity—then the focus is still on: the domestic computing power chain and hardware semiconductors, etc.

As for the commercial aerospace breakout into a limit-up wave today, for now it’s also because this “script/keyword” appeared suddenly, causing quantitative strategies and momentum-followers to rush into the first-board trend. Preliminary view: will quant strategies exit next week and where will the funds flow back to? That’s unknown.

If there’s no new incremental commercial aerospace “script,” then the sector will basically be like last Friday’s robot limit-up wave—just a burst of wind, then it fades quickly, leaving the people who blindly chase the open with a clear-messaging signal to turn off the lights and eat instant noodles.

Simple tracking recap this week
Because early this week’s market was so weak, it was all in a “watch-and-quietly-wait” mode. Take Suqian Liansheng that was tracked last Friday. On Monday of this week, you focused on tracking Norde shares, Yellow River Rotating, and Eston. Did you notice that these logics all had bullish engulfing and limit-up again on Tuesday? That shows Tuesday’s market was a repair. Later, after two more logics (Norde, Eston) were tracked again, the market weakened. It drew a bunch of haters. But the truth is these logics should have been watched much earlier—you can’t wait until after Tuesday’s bullish engulfing and limit-up to start watching. And in fact, it also proved that Wednesday’s market was even weaker: it was the big retreat/pullback “ice point.”

Later, Star-Wang Net and Ruijie also had bullish engulfing and limit-up. In addition, Tai Chi Group (healthcare/medicine), ZTE, Baoding Technology, and Tsinghua Unigroup all saw decent repair because starting Thursday, tech had a big inflow back.

Today’s market was very strong in the early session, but after the morning strength, the situation changed abruptly in the afternoon. Some logics fell back passively. Still, Monday needs to confirm it: bullish engulfing or not!

In short, early this week was difficult. But if you truly carried out your cognition, pre-judgment, response, model selection, and position management, then walking out of this sluggish market isn’t hard normally. The hard part is:

Not trusting at first—then only trusting later!

After finally getting the board opened, you just boarded casually—like Baoding Technology today. Yesterday you didn’t trust it; today you trusted it and boarded again—that means you get to eat the 15% pain.

So if you’re going to trust, trust early!

Like the domestic computing power chain and Tsinghua Unigroup—if next Monday they gap up high again by 4 or 5 percentage points, then you’d think: “Go!” Why didn’t you trust today then?

The reason is the same as believing in a person: your first instinct is the most accurate. Later, in the process of interacting, various factors (like the market tape, the index and sentiment collapsing hard) lead to all kinds of doubts, which overturn your first instinct—and then you might be wrong.

Back to the question in the first paragraph: if it’s big tech, then choose the domestic chain in the tech industry chain—like computing servers, semiconductors, etc. In any case, focus on believing first. Then, within the sector, choose the core stocks, and make sure you catch the rhythm—pay attention to timing and nodes.

Actually, short-term trading isn’t that hard; the hard part is: when you see divergence on the chart, you start doubting; when you see it rising, you start believing. That’s not okay. If chasing highs and killing lows could always make money, then the rule “1 gains, 2 flat, 7 losses” for stocks might need to be rewritten as “7 gains, 2 flat, 1 loss.”

Because all retail traders chase highs and kill lows.

Didn’t someone say it? If you think you’ve been losing all along, then respond in the opposite way: specifically pick the things you’re least afraid to look at; specifically pick the strongest ones (normally the ones you wouldn’t dare buy). When it’s time to sell, the more you want to sell (after a big drop) the more you add to your position; when you don’t want to sell (after a big rally), you should sell more.

This simple truth still hasn’t been mastered by many people until now. In fact, it’s really like this. But if you always cling tighter to the “stocks you think you dare to buy,” the more they drop, the more you hold tightly—that’s actually not right. Because what you think you dare to buy is trash (you often dare to buy it and often lose money—so isn’t it trash?). Trash isn’t allowed to be corrected with time; only leaders/dragons will be.

I’ve said so many lessons; maybe here you should get some likes. Come on—one dragon like that. If there aren’t likes, it means you still haven’t悟到 what I’m saying.

Before cultivating, the road ahead is long and far—so far away you can’t reach!

Finally, wishing everyone a happy weekend!

-Statement: The above logic is for reference only and does not constitute investment advice or a basis for third-party investment.