Fanaticism will eventually come to an end, and value will always return in cycles!

Part 1 [Taoguba]
Intro: The A-share market in the near term is staging an epic showdown between old and new retail investors. Young people are going all-in on an AI frenzy, while veteran investors cling to traditional industries and watch with cold indifference. This isn’t just a generational conflict—it’s an A-share “scripted murder mystery” for a bull market that’s been rehearsed for 20 years exactly four times, with no changes to the lines or the supporting cast. The moment the so-called tech-stock market dream rate breaks through the sky, the true winners are always the kind who can resist temptation and have “holding on to the principal” engraved into their bones!

To understand this extremely extreme split-market right now, we need to be clear about this absolutely变态 (perverse) capital “Matthew effect.” A while back, on one side, computation power, optical modules, PCB, and semiconductor concept stocks were showing their performances every day—continuous hype-driven surges. No matter whether a company has core technology, as long as its name includes “micro” or “intelligent,” and as long as in its reports it dares to mention something like “earnings surged,” the stock price can keep hitting daily trading limits and making new highs. Under this highly visually shocking “making money” effect, countless retail investors cut their losses in tears on their low-position holdings, turning around with anger and anxiety to扑向 those tech concept stocks whose P/E ratios are as high as several hundred or even over a thousand. And this is exactly the effect the main funds want! But on the other side, those veteran investors who are mocked as “old-timers” still manage to firmly press—but not press—the buy button on their trading app.

Aren’t they old and their minds can’t keep up? Can’t they see how beautiful the AI future is?
Wrong!
Because they see it too clearly!
In their eyes, those technology stock leaders that hit limit-up again and again every day and keep making new highs, and those “monster stocks” from the past that fell all the way to delisting—have the same cannibal face!

Someone always says under my posts, “This time is different.” Someone always says, “Only technology can save the stock market.” But I want to tell him—or tell them—this: the stock market is always a cycle of history. There’s never been anything like “this time is different”! Let’s roll the time back and look—how the same script three times in a row has stripped retail investors of even their last underwear!

The first round was the heavy industrialization revolution. The country wanted heavy industry—so the stock market launched a coal, nonferrous, and steel bull market, using retail investors’ money to build factories and mine.

The second round was the 2015 “Internet+” frenzy. The country wanted “internet innovation.” That was the era of a full explosion of mobile internet. If a company went to the工商部门 (industrial and commercial authorities) to change its name to include “internet,” its market cap could double immediately! The result? Those “hundred-yuan” monster stocks that were once hyped to the sky, in the end commonly fell by 90% or even got delisted!

The third round was the 2021 new energy theme. The country wanted a new energy revolution. Retail investors’ real cash and real gold and silver supported the solar and lithium battery capacity boom, driving China’s new energy to become the world’s No. 1—hard and fast. Back then, solar and lithium battery companies had their prices up one day after another. CATL was crowned as “Ning King” (宁王). But when the “together-backing” capital fell apart, the entire lithium-sector and solar-sector entered a long three-year bear market.

Now it’s the fourth round. Facing the U.S.’s chip export controls and computation power hegemony, China must break through in semiconductors and AI. How to break through? It requires massive capital to experiment, to develop, and to smash money into lithography machines. Where does the money come from? The answer is obvious! We can be objective and say: every leap in China’s manufacturing industry and technology is absolutely half of its “milestone” credited to this generation of stock traders who get harvested.

Same recipe, same flavor—every time there’s a grand era narrative so irresistible. Every time it tells retail investors: This time is different! This is the absolute trend of human development! But what happens in the end? The first half of the script doesn’t let retail investors realize it. In the second half, it starts pushing the narrative into “creating gods,” and then makes the investors who rush in stand guard at high positions. Think about those current “dragon” stocks priced in the hundreds to thousands—those “fans” who tell me under my posts that this time is different—do you hold the one you entered back in the seed stage?

Yes, the grand narrative is epic—but it belongs to history textbooks. As living individuals, we shouldn’t become this cannon fodder. If the age wants to develop technology—that’s the country’s overall agenda. Protecting our own money pouch is the only overall agenda ordinary people should worry about!

Everyone has heard the term “involution,” and people think it only happens in traditional industries. But I want to tell you: the technology sector is the biggest involution king! Because in the technology sector, there is never anything like a “moat.” So how do veteran investors dare to smash their decades of pension into a company that may not even be alive after 5 years?

Let’s flip open the F10 and look now: some semiconductor leaders on the STAR Market have P/E ratios as high as several hundred, and some even have net losses for the year—the P/E can even be negative. What supports these companies isn’t today’s cash flow, but the elusive “future expectations.” At the same time, if you go look even a little into the semiconductor and computation-hardware companies you worship like gods—what you’ll find is that their major shareholders and executives are queuing up to release reduction-of-stake announcements, and even the original shareholders whose shares just got unlocked are eager to cash out and exit!

What does that mean? It means their “real parents” (their controlling shareholders) all think the current stock price is outrageous. Because they know better than anyone how much those so-called core technologies in their own companies are really worth.

In this A-share Shura field, never bet that you can run faster than institutions!

Hype will eventually end, and value will always cycle back. Before the tide completely recedes, I really can’t wake up someone dreaming of wealth. But on the historic stele, the same blood-chilling old saying will only be repeated: “Only veteran investors who hold the line will ultimately pick up, calmly and unhurriedly from the ruins, those cheap chips that truly belong to the future—with the entire principal intact.”

Part 2 Review The index rebounds strongly—how far can it go?
Today the overall market rebounded strongly. The Shanghai Composite jumped from 3,900 to 3,960, and some people are already celebrating like crazy. But I’ll say the same thing again: it won’t immediately enter the main advance wave. The market ahead will continue to consolidate below 4,000. There is absolutely no way it can break above 4,000 in a short time. It won’t directly move into a main advance wave! Even below, the 3,850 support level still needs to be touched again once more. Because the pressure from the dense trading area around 4,200 is extremely heavy. Want the state to come up with real money to push it through? Dream on! No matter the Shanghai Composite, the Shenzhen Component Index, or the ChiNext Index, above there are clear head-and-shoulders patterns. In the medium term, only wave-like adjustments downward are expected. Only after a new bottom formation forms below, could it later possibly recover a bullish outlook.

Let’s talk about tech stocks

1. Semiconductors: Today they got supported at the 30-day moving average and rebounded. From the index’s MACD, the last time—when the second wave adjusted from the high of 1,900 down to 1,600—the move was 15%. This time it adjusted from a high of 2,470 down to 1,965—a move of 20%. So in the future, will it form a double top, or will it keep trading in a range and form an upward continuation? We can’t give a definitive conclusion right now, but since the adjustment magnitude is increasing in both instances, personally I’m more inclined to think that over the next week there’s a high probability it will break below the 30-day moving average and break down, with a higher chance of forming a double top!

2. Electronic components: Today saw a big rebound. I previously emphasized that the top in the 618 to 630 range had already formed a triple-top structure, and it has also formed a wave-like downward trend structure. Tomorrow is expected to have a push-up phase, roughly seeing 3,750 points. If later it accidentally breaks downward, then the adjustment magnitude could be quite deep—afterwards dropping into the vicinity of 3,340 points. If it can consolidate within today’s big bullish candle body, then later you may see around 4,150 points.

3. As for optical optics and optoelectronics: Today’s weak rebound didn’t even surpass half of yesterday’s bearish candle body. Even if it continues afterward, it won’t be able to exceed 1,270 points. This sector has basically finished its task early.

4. Communication equipment: Today also saw a sharp rise, but this rebound is more like a sideways consolidation range during a decline.

5. There’s one strange thing: a few days ago I was bullish on IT equipment. After thinking it through, I realized I overestimated the pseudo-proposition of “domestic substitution.” In reality, the whole sector is in a wide consolidation range, and this big range will bring comparatively strong volatility. That’s why I thought it might break out and enter a main advance. It’s also possible that the main forces use the adjustment in tech hardware to deeply wash the market in preparation for the later rally. As for exactly how it will go afterwards, we still need to see: if it can return above 1,250, only then can it basically be confirmed whether it genuinely intends to break upward—or whether it’s still worth paying attention.

Now let’s talk about medical and healthcare
Today it also closed with a big bullish line. As mentioned earlier, it would have consolidation between 1,050 and 1,100 and form an upward continuation. Judging by current conditions, it has formed. But today’s trading volume is a bit too large—retail participation was too deep. We know retail investors are naturally on the opposite side of the main forces. This means the market likely won’t start up in the short term. The main forces will definitely carry out a shakeout. As retail investors, we either stick to the positions we already hold, or chase the “dragon” stocks within it. As long as the main forces are willing to keep consolidating within this range for about two weeks, rather than engaging in deep sell-offs, then the upward momentum later will be stronger.

Let’s talk about coal
Because a fan entered a coal stock today. I had specifically mentioned this stock a few days ago, but back then it couldn’t hold and continued to sell off down to the previous bottom, only then came a limit-up. As for coal overall, the index structure is still okay. By “okay,” I mean relative to other sectors besides medical and healthcare, it’s worth taking a gamble on in the short term. The weights within it can be used to participate. As for how far it can go, it likely won’t match medical and healthcare.

Individual stocks won’t go into them. For now, I’m only participating in the highest-end stock and in medical shares. Other than that, I don’t see any particularly special expectations. Everything is already laid out above.

That’s it.