[Red Envelope] 7.10 Institute Research Recap — a transformation week that was first muted and then turned upward; still steady happiness (Why did the index’s fortunes suddenly change?)

Hello everyone, our research institute focuses on uncovering core stock opportunities within hot sectors, and through practical execution via our trading strategy system, we share them with you. The core operational approach consists of the following three points: [TaoGuba]
1、Screen hot sectors to set the direction: Ignore the scattered and noisy one-off themes during the open, and precisely sort out sustainable leading-hot-sector themes that are backed by triple support—policy, industry, and capital—and are capable of sustaining streaks of consecutive gains, while avoiding the trap of one-day-only themes, reducing invalid trades from the root;
2、Choose the core and抓 the leaders: After locking onto the hot sector, filter step by step the dominant core stocks within the sector with the highest recognizability and the most tightly held by capital group behavior. Only trade the front-row leader stocks that market capital is actively attacking;
3、Build a system to control盈亏: Combining years of live trading experience, we independently developed a mature and efficient “dragon-style” short-term trading strategy system. It includes the “Divine Dragon” strategy, which turns disagreement into strength and then to unanimity, the “Return-Dragon” strategy for low-position play “one into two” as a relay, and the “Rise-Dragon” strategy that primarily targets short-term trends. It comes with a fully standardized set of take-profit and stop-loss operation rules. We strictly participate in the mainline core targets according to system signals, restrain emotion-driven chasing and panic selling, and polish over the long term to achieve stable account compounding profits.
Every day, we persist in real-time disassembling of the complete intraday order book, sorting out the mainline rotation rhythm, capital flows, and changes in strength/weakness, while simultaneously sharing practical execution ideas for the strategy and the stock-selection logic. Daily, we also review the useful takeaways. Let’s exchange and refine trading cognition together, steadily improving short-term execution ability.

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Why do I say this week is a transition week? I won’t go into it specifically. Fans who know already know—it means we’ve taken on even greater responsibility to do the content well and achieve mutual success.
After a week, it’s the four words from the title: suppress first, then uplift. At the beginning, I really wasn’t used to it. It felt like after dating in college, the first time you go on a trip with your girlfriend—only this kind of trip can’t be fully returned the same day. After the trip, you have to swear you’ll be really, really good to her. Then, paradoxically, it becomes easier to distort your actions—you can’t fake being genuine for long. Everything has to be true-to-character to last. The first couple of days, I confirmed I was quite responsible and nervous, and even invented a term: “second echelon.” In the end, Monday and Tuesday didn’t go quite as well. As the saying goes, there’s a limit to repeated mistakes—after Wednesday started adjusting, things finally showed results clearly. I firmly kept happiness within the dragon-style strategy system. The dragon-style strategy—that is Noah’s Ark.

Today, our Ark is still sailing smoothly. Although during the afternoon’s big plunge, the classmates on the ship also felt some waves, overall it was all scare but no real harm. The Return-Dragon strategy we participated in on Wednesday and Thursday saw all of them hit limit-up the next day. Today’s Divine Dragon strategy also stayed at limit-up for a long time. Unfortunately, in the end it was dragged down by emotions and didn’t manage to reclaim the close-on-close (回封). It closed at 7.65%, which is a bit regrettable, but when looking around, for the tech category it’s already excellent. As usual, after the close let’s check the answers together and talk about the reasons. What we’re talking about today is Ziguang Co., Ltd.

First, why did we choose Ziguang Co., Ltd.?
A turnover-rate stock that has marched all the way—none of it is easy. Some of it is coincidence, and some of it is simply destined.
Ziguang Co., Ltd. saw an unusual surge to limit-up around 26 yuan on June 30. The reason for the limit-up that day was basically: policy-level continued release of positive news. On June 29, the State Council executive meeting clearly required “stepping up support to advance innovation breakthroughs in artificial intelligence, accelerating key technology research and development, and building ultra-large-scale intelligent computing clusters.” Earlier, the nationwide integrated computing power network had been included in the “15th Five-Year Plan and 109 major projects” (十五五) plan. Computing power has been positioned as a new type of infrastructure that is as widely accessible as water and electricity. The next day, June 30, the sector where Ziguang sits showed a significant linkage effect. That day, the switch concept kept rising intraday. Ziguang Co., Ltd. and FiberHome Xingwang (星网锐捷) both hit limit-up, while Ruijie Network (锐捷网络) hit limit-up at 20cm. The WiFi 6 concept sector rose 6.49%, and multiple stocks within the sector also hit limit-up.

After that, there was a three-day adjustment, and on July 6 another limit-up appeared. The reason for this limit-up was: on that day, the switch concept was the market’s most core speculative mainline, and the leading stock’s earnings ignited the sector’s momentum. FiberHome Xingwang (星网锐捷) announced that it expected Q2 net profit to increase month-over-month by 632%–955%, directly igniting the sector’s sentiment. However, on July 6, the day after the limit-up had no real premium—after all, it wasn’t its own half-year report positive catalyst. The next day it was basically sealed and suppressed all day.
The gears of fate started turning on July 8.
On the evening of July 7, Inspur Information (浪潮信息) released an extremely “explosive” forecast for the half-year report.

The next day, Inspur Information hit limit-up in a one-price board, with an enormous order volume. Under the mood influence of the big brother, Ziguang Co., Ltd. also opened with a huge gap up. That day it nearly hit the limit-up price with a gap-up of 9.59%, then failed to sustain and blew off the board all day. By the close, it was up 6.80%. After all, the surge in earnings was someone else’s business—you were just joining the excitement, the same logic as what happened on July 6.

Yesterday, Ziguang Co., Ltd. had already entered my watchlist as a backup. But I still thought it should go for the stronger Inspur Information. Yesterday I didn’t go to pick D Ziguang. Yesterday late in the day, there was a big tech comeback. As part of the AI servers branch, it didn’t really hit limit-up much either. Naturally, it rode on the rebound’s tailwind, and Ziguang’s close yesterday was also quite good.
So the story slowly moves into the most critical part.
Why, this morning, did I still pick it as a backup?
My logic is:
First, just said it: this is a branch within tech that hasn’t really risen much—whether it’s Inspur, Sugon (中科曙光), or Ziguang, none of them had been clearly favored by capital. Coincidentally, after the half-year report positive catalyst for Inspur, many funds thought the same as me: “Huh? How is there still tech with such low upside? Let’s do it.”
Second, Inspur Information already had a two-day consecutive board, and the possibility of a three-board was extremely low. In yesterday’s review I also said: Inspur’s two-board setup is already very impressive; trying to gamble on a three-board doesn’t have much chance of winning. So, who could take over that status within the same sector? After looking around, only Ziguang was relatively suitable. With two earlier limit-ups laying the foundation, and with its scale also relatively mainstream, my prediction when selecting stocks was that Ziguang might take over the sector’s baton today.
Third, tech stocks rebounded yesterday late in the day, but whether they could maintain it wasn’t certain. If you pick a sector that is tech but relatively safer, then if the tech rebound fails, you still have a fallback route.
Based on these three reasons, Ziguang was placed on my menu.

After a day of competition, now all the answers are revealed.
First, yesterday’s afternoon tech rebound: today, after the high opening and strong run early on, it was killed down again. But the sector Ziguang belongs to still passed the test. My prediction that Inspur might not continue to board was correct—Inspur Information indeed didn’t board again and closed at 4.11%, far below Ziguang.
When I was watching intraday today, around 9:55, once Ziguang’s gain first exceeded Inspur’s, I felt the market would once again validate the idea that since capital couldn’t move Inspur, it would come to Ziguang. Some classmates will surely ask: “You said you always trade based on what you can see with your eyes from the market—so why are you daydreaming again?” You’ve misunderstood. In stock selection, you do subjective interpretation and selection. “Seeing with your eyes” is one thing—but you can’t daydream that Ziguang will rise just because you entered early. The key is: the operation on that day must be based on the market. You can’t, when Ziguang opens 3% lower, think it can pull up and accept the overflow capital from Inspur. It also has to have certain conditions. Capital already chose it immediately after the open—that is the correct signal. If it doesn’t rise, how could I enter? Daydreaming has never been able to guide operations.
It’s just a pity that in the afternoon, tech once again turned into birds that sensed danger. Institutions within it and retail investors alike all scattered. Ziguang was also affected and didn’t manage a successful close-on-close reclaim. If a stock has already caught momentum and been brought under the spotlight, it won’t end so easily. Next week still has good expectations.

The above are some shares about today’s Ziguang.
Now let’s look at the overall market situation.

I remember when I was watching that area in the morning, it showed that the whole day’s increase was around 700 billion (in the chart’s unit), and the index rose nicely—completely a narrative of a market-wide rebound driven by technology. But by the afternoon, the situation changed abruptly.
As of the time of writing, I didn’t see any particularly bad-news catalysts. Also, today the number of rising stocks was 2x the number of falling stocks, and the index was completely diverging. In the afternoon, commercial aerospace surged and collectively hit limit-up due to news that the Long March 10-Y (长征十号乙) successful sea recovery. That was adding insult to injury for tech categories that had already rebounded early but then lacked follow-up capital to keep it going. Capital was continuously extracted, becoming the last straw that crushed the camel.
For example, Zhaoyi Innovation (兆易创新).

This is a fairly typical intraday time-share chart of today’s tech stocks. There are many with charts like this. Some are even worse—like Baoding Technology (宝鼎科技), which basically hit a quick limit-up in the morning and then closed at -6.5%.
That means: the tech stocks’ rebound itself, as the afternoon approaches, already becomes hard to sustain. Then at midday, another “rocket successful recovery” news stimulus came out, pulling commercial aerospace funds in. It only made the mainstream tech rebound even worse. The capital kept flowing out, and it became the final straw.
Actually, even Huatian Technology (华天科技), the top performer today with a one-price board, was still smashed into a broken board (烂板) alive right at the end of the midday session.

So let’s just accept the numbers and be fair-hearted. It’s understandable that Ziguang could close at 7.65%.
Let’s talk about commercial aerospace
It had been speculated on for a wave lasting two to three months before. Back then, rocket recoveries kept failing. When we finally waited for a success, in my view, it was already too late.

I still hold the same universal viewpoint: a sector where most limit-up stocks are still trapped in deep pits cannot truly break out. On Monday, it may take the same path as today’s tech—leaving only some possibilities of making new highs that could still have consecutive boards. No later than Tuesday.

So, the rebound of mainstream tech can be considered to have already ended—an orderly, good-looking rebound at best. The market has now entered the “N-country split” situation again, returning to the chaos where there’s no dominant core sector support for the big picture. Everyone, take care of yourselves!

Statement: This article only records my own operations. Investing involves risks; trading requires caution. The content of this article belongs to my personal ideas and records. As a record of my understanding of the market, it is only for personal sharing and reference. It does not constitute any investment advice. Any trades made based on it are at your own risk for profit or loss.