Mainless Chaos Period (Green buys, Red sells)

Current holdings: Yak Keji, Huatian Technology, Hailanxin, Chengchang Technology, Qinglong Pipe Industry, Aerospace Development, Torens, Satellite ETF, (Communication ETF, Semiconductor Equipment ETF, Chip ETF, STAR Market 50 ETF) [Taoqiu Ba]

Yak Keji: Held positions for a day—heartache.

Huatian Technology: Bought one lot during the morning board queue, and at the end-of-day I chased a bit via the closing-auction breakout.

Hailanxin: Went in during the afternoon.

Chengchang Technology: Boarded—it was a huge loss.

Qinglong Pipe Industry: Bought at the opening auction. The recent typhoon news has been a bit too much—every year they end up trading it. It’s going to be logged in over the weekend; on Monday I’ll set a take-profit order and leave.

Aerospace Development: Former aerospace old “dragon”; I boarded the breakout.

Torens: Semiconductor components. I bought a bit near the moving-average area, and added another lot at the close.

Satellite ETF: Boarded + added 2 lots on strong buys

Technology ETF mixed bag: I reduced after a morning surge, then when it pulled back to 0% I added again. (So painful)

Yesterday’s recap review:

Yesterday was a massive tech spike—I didn’t even dare to mention individual stocks, because it was unclear whether yesterday was an oversold rebound or a reversal (today confirmed it: a yin engulfing a yang, not a reversal). The reason I still traded ETFs yesterday was because I was expecting a “surge then fall” and then a V-shape. My expectation yesterday was: sell the ETF after the early-morning surge; wait until it drops below water—at -2 or -3—then buy back. Individual stocks: if they didn’t hit the limit-up before 10:00, sell all. But today I didn’t get the “unity of action and knowledge”: the ETF only trimmed positions, and I didn’t wait until -2 to -3 to buy back—so the trimmed portion wasn’t re-added. Individual stocks were sold according to the plan (but Yak Keji I kept holding all day because I was subjectively still bullish, missing 8 percentage points).

Today’s new branch: Aerospace successfully completed a midday recovery. The open was a violent rally, so I could only follow the board breakout. Later, the strength looked extremely strong, so I added several more lots of the Satellite ETF. At that time, before the broad market pulled back, based on the afternoon strength, you could have had a pleasant weekend. Who knew that quant funds would rally Aerospace and dump Tech—Tech dragged the broad market down, and the broad market dragged Aerospace down. A loop upon a loop, and my account directly followed into a plunge—so unbearable.

Last night before sleep, I added the continuation of the recap; the expectation was the same—sell first, then take it back while it’s below the waterline. But in the morning, some big green candles as rebound vanguards: today it kept falling all the way down. And the stored-memory-related Zhej innovation also fell all day, along with continuously increasing trading volume + yesterday’s rebound leaders were all yin engulfing yang + trading volume kept expanding, with not even a decent rebound. Price action was far below expectations, so in the afternoon when it dropped into deep water, I didn’t dare add anymore.

$1 Division Line ==========

Question & Answer:

1、Has tech ended?

Keep the original view: this bull market was driven by the development of artificial intelligence; if tech ends, then this bull market ends.
Whether it’s storage, optical modules, or semiconductor equipment—what I think is that none of them are the top here. But right now it’s not the main surge phase. In the short term, it should be mainly a pullback-and-consolidation type—there needs to be continuous shaking to digest the sell-off chips in the near term. The sector’s trend should oscillate around the current position; big rallies and big sell-offs are likely. The pattern should be: step back 2-3 times, then step forward 1-2 times. (Suitable for adding during consecutive 2-3 day big pullbacks, then selling on big bullish candles.)—What’s said here is for the entire big sector’s daily K, unrelated to the sub-sectors and individual stocks (during the process, some sub-sectors may dip deeper as A-turning down appears, then a new sub-sector will strengthen).

2、How should we view storage, optical modules, semiconductor equipment materials, PCB, fiber optics, etc.?

First, you should understand a big sector’s smaller sub-sectors, and then the finer sub-sectors within those sub-sectors (individual stocks are just for example).

Semiconductor: Recently the trading in storage, equipment, and materials is all part of the semiconductor space.

Optical modules: The previously hot trades were CPO, fiber optics, and optical chips (there are too few optical-material stocks, so I didn’t list them).

PCB: The prior trades were the upstream of PCB—electronic cloth, copper foil, resin, CCL.

Second, after understanding the sectors above, then find the corresponding sector indices.

Storage: First look at the box (red frame), the blue arrow, where the 5-day line crosses above the 10-day and 20-day lines (the 5-day, 10-day, and 20-day are basically stuck together; the 30-day line keeps getting stepped on back and forth). Then a big bullish candle breaks out. The next day it gaps up directly above the previous high.

Then look at the far-right: the 5-day MA has crossed below the 10-day MA; it is currently close to crossing below the 20-day MA. Right now it’s around the 5-day and 20-day. If on Monday it can’t close back above the 5-day line, then afterward it’s likely to search for support around the 30-day line. You’ll then see whether it forms a box on the 20-day and waits for the 30-day to come up for re-testing, or forms a box on the 30-day and waits for the 60-day line to come up for re-testing.

Semiconductor equipment: Similar to storage.

Fiber optics: Look at the red arrow. The 30-day line broke straight through—there was no support at all. Then it continued breaking down to the 60-day line with no follow-through support. In such a continuously weak sector, A-kill can happen to the sector—so individual stocks will also A-kill. This has nothing to do with fundamentals. It’s also currently probing the bottom to form a box. As for where the next box is, nobody knows—it has to wait for the sector to pull back and then consolidate to show it.

PCB: Actually it’s similar to fiber optics, slightly better than fiber optics. Right now it’s also around the 60-day support level—need to observe whether it can form another box and consolidate around the 60-day.

Lithium batteries: Worse than fiber optics.

Innovative drugs: After probing the bottom, the 5-day line crossed above the 10-day line, and kept crossing above the 20-day line. A few days ago when it pulled back to the 20-day and 30-day supports, it rebounded. Now the 5-day line is still in the state of having crossed above the 10-day and 20-day lines. Also, after the recent large tech drop, it’s one of the few relatively strong sectors.

Finally look at the two major sectors:

First: the big chips sector—mainly the semiconductor direction (equipment, materials, storage, packaging)

The past few days were re-testing the 60-day moving average and a support level within a big box. So the first thing we need to observe is whether the 60-day moving average can hold. If it can’t hold, then we look at the support level at the lower edge of the red box. (Right now the chips/positions are pretty messy, so it’s not something that can be fully worked through in 1-2 days; it needs time: short term 1-2 weeks, medium term 3-4 weeks, and long term is hard to say.)

Second: the big communications sector—mainly (optical modules, PCB), including upstreams such as: fiber optics, CPO, copper-clad laminates, electronic cloth, etc.

The 60-day line was broken directly; the chart doesn’t look great. First check whether the lower edge of the big box above can hold. Suppose it can’t—then most likely we’ll have to wait until the 120-day line comes in.

Actually when comparing the two major sectors: looking only at charts, the semiconductor sector’s chart is better-looking than the communications sector, because it’s still above the 60-day moving average. You can also see from the recent rebound strength: every time, the semiconductor’s strength is higher than communications. And within semiconductor, the branches are also more numerous and stronger than communications. For individual stocks, it’s the same. (Recently I’ve seen many ask why fiber optics is so miserable, why PCB is so miserable, why lithium batteries are so miserable. If you can understand the sector chart, you can detect the problems earlier.)

I often mention chart-reading: looking at moving averages, looking at support levels. Don’t think these things haven’t changed—because whether it’s good news or bad news, ultimately it will be reflected in the candlestick chart. There’s another more critical thing: the market’s candlesticks always reflect messages before the messages themselves. (Because there will always be people who can discover the news first. For example, sometimes the market looks weird, and it drops for no reason, and it’s a big drop. After it falls, you only then find out it was caused by some negative news/letter.) For example, on Friday—Jingji Xuchuang—started dropping in the early session; by the time it had already fallen below the waterline, only then did it become clear that some small notice about Q2 results falling short triggered the sell-off.

Finally, I’ll address the question everyone cares about most: Will there be a rebound in tech tomorrow?

I don’t know whether there will be a rebound tomorrow. But suppose tech continues to drop for one more day, then the probability of a rebound the day after is higher. Based on the sector charts, the branches within semiconductor should do better than the branches within the communications sector. For communications, the only thing with a relatively better chart right now is switches.

The above is only case-based analysis, not a trading buy/sell recommendation.

$1 Division Line ==========

Data overview:

Sector rotation: There is currently no main line anymore. The reference value isn’t very big. We can only find some rotation rules—like after a rotated sector explodes, it needs a few days before it explodes again. Is it 1 day later, 2 days later, 3 days later, or does it wait for a pullback to a key moving average before exploding again? This is a rule worth studying.

For example: innovative drugs—first explosion; pull back for 3 days; on the 4th day it explodes again; then it pulled back for 1 day’s moving-average test and continued exploding for 4 days; then it pulled back again for 3 days and re-tested the 20-day moving average. On Friday it exploded again (so the Aerospace that exploded on Friday—suppose it pulls back for the next 3 days, should we pay attention then???) This is just an example; it might also pull back for 1 day and then have unusual movement again the next day. Actually these rotated sectors have one feature: they all “absorb tech’s blood.” So when tech pulls back, if you see unusual intraday movement in them, is that something to watch? These are all rules worth studying.

Average position size and profit/loss: Position size is normal, but in the past 7 days only 1 day was red. If tomorrow continues green, then Tuesday will be a pretty good buy point for tech.

$1 Division Line ==========

Tomorrow’s expectation:

Actually, a lot of the data above has already been written out. If you still want to watch tech, focus mainly on semiconductor equipment and materials, plus one advanced packaging. If you want to watch the communications sector, prioritize switches. If you want to watch other rotated sectors, you need to find the rules after a sector’s explosion. Right now, among the rotated sectors, innovative drugs looks best. Aerospace already exploded once on Friday; based on the rotation logic, tomorrow should be “go weak and leave strong,” waiting 2-3 days before paying attention again (most likely, attention on the next day of a tech rebound. Suppose tech rebounds on Tuesday—then on Wednesday you can wait for a cost-effective pull-in point. Instead of that, it’s better to wait for the sector to pull back to key support/critical moving averages, then choose the currently strongest names.)

Right now we are in a chaotic period with no main line. Either wait for tech to pull back 2-3 days to buy, or find rotation themes intraday every day. My tech judgment is that it rebounds on Tuesday (suppose a low-probability case of a rebound happens tomorrow; then the rebound on Tuesday may not exist). Rotation themes are hard to judge, so I’ll handle positions tomorrow.

Tomorrow plan: None (watch intraday)

Position management:
Aerospace: Tomorrow should be sell everything after an early surge.
Tech: If tomorrow morning has a chance to rebound, I’ll sell everything; I won’t hold any ETF. If tech continues to fall, I won’t add; I’ll wait until Tuesday for a continuation of the sell-off and then buy.
New stock Torens: Suppose tomorrow’s opening auction gap-down is around -5, I should buy to do T. If tomorrow opens gap-up, I’ll leave directly after the early surge.
Typhoon-related Qinglong Pipe Industry: If it opens gap-up tomorrow, I’ll sell.