Career Review: Low-volume “pump-and-dump” deception to trick sell orders, foreign capital extending its support as technology gets repaired, while domestic capital dumps to switch into an oversold rebound

Career review—no idle theory talk, no keeping a logbook. Let me break down the underlying rules into plain language for you. Only “natural talent” types will pay attention to me; the impatient and obsessive types won’t be able to understand the content. I hope new friends keep your patience, keep following closely, and after staying with it for more than a week you’ll get a big improvement in your short-term overall market perspective. I won’t let down the trust and expectations of every friend. I’ll keep producing high-quality content for everyone. Please remember to like and support the channel often. It’s free teaching. The only hope is that more helpless and confused friends can see my lessons. We help each other and make progress together!!![Taoguba]

【Market Index】(Bottoming out and rebounding, shrinking volume for a rebound)

• Shanghai Composite: closed at 3,967.13 points, +1.36% (early session briefly broke below 3,900, lowest 3,869.30)
• Shenzhen Component: closed at 14,924.87 points, +2.77%
• ChiNext Index: closed at 3,851.14 points, +3.43% (range amplitude reached 4.86%)
• Trading value: about 2.72 trillion yuan across Shanghai and Shenzhen, shrinking by about 113.8 billion yuan versus the prior trading day.

【Sector Gains and Losses】

• Top gainers (tech industry chain): Printed circuit boards (+6.86%), Glass fiber (+5.82%), Components (+6.38%), Oil and gas exploration and services, Industrial metals, Precious metals, Pharmaceutical distribution. Individual stocks like Shengyi Technology, Hu Dian Shares, Jinan Guoji, Dongshan Precision, Tongyuan Petroleum, Zhongman Petroleum, and YaoyiGou all hit the daily limit.
• Top losers: Aerospace-related (-1.00%), military industry electronics (-1.92%), Beidou navigation, IT services, games, film and television circuits, telecom services. Individual stocks like China Satellite, Aerospace Power, and 3D Communications hit the daily limit down or fell more than 10%.

【Individual Stock Movements & Daily Limit Hits】

• 4,211 stocks rose across the whole market, 1,247 fell
• 87 hit the daily limit up, 25 hit the limit down (mostly military aerospace names). Daily-limit sealing rate was 80%. The highest “consecutive limit-up” on the short term was 3 boards. Hengshang Energy Saving 8+2 boards; short-term sentiment is improving.

I. Cycle Characterization + Node Judgment

Today’s market played out a textbook three-act drama: “selloff with shrinking volume and divergence—afternoon comeback with rising volume—overall shrinking volume for an intraday rebound.” Trading is relatively difficult here. In the morning there was divergence with shrinking volume; in the afternoon you could either catch a repair rally with expanding volume, or catch a panic selloff with expanding volume. In the early session, the Shanghai Composite dropped more than 1 point, the SSE STAR 50 was heavily down, and more than 2,900 stocks turned green—so much that I really thought the major bottom was coming out. But in the afternoon, driven by the Korea/Japan market repair, after the afternoon open foreign capital returned to buy and repair, and the tech industry chain fully surged back—also with volume expanding. However, the rate of volume increase wasn’t enough, so the intraday rebound’s sustainability is worrying. From the software’s成交对比 you can see the volume comparison between today and the prior two days; many friends using mobile charting apps might not have this function.

Let me teach you a technique to spot the intraday emotional high point—write this down. If at the afternoon open you can confirm the structure of a shrinking-volume rebound, then an emotional high point must exist here. The emotional high should be anchored by the cycle core. For this, you only need to watch the performance of Litong Electronics, Baoding Technology, and China Jushi. After China Jushi and Baoding Technology hit limit-up and then blew up (chips loosening), the tech side is basically already at the intraday rebound high point. Why? Because the cycle core has gathered most of the人氣 (speculative momentum) of the whole cycle; when even the人氣 core blows up, other names likely won’t go far either. So today is suitable for players holding positions to manage realizations based on the situation. Those holding strong names can observe for one more day; otherwise, you should realize and exit. But it’s not suitable for cash-holders who try to chase highs during the day and get passively hit.

And today’s big bullish candle in the index wasn’t due to tech. The rally in the last hour relied more on oversold/defensive sectors like liquor, healthcare, real estate, and insurance. This is the classic “foreign capital returns, tech gets revived, domestic capital cashes out, buyback of oversold positions, rotation within the market, and funds chopping each other.” At the close, since it’s a shrinking-volume repair rebound and new funds still haven’t entered, characterize it as the split-type rebound at the end of a selloff tide—not a reversal. So this level still isn’t a true bottom. Over the next two days, keep watching how divergence and the selloff tide in the tech direction lead the index to retest the lows. Tomorrow morning, if there’s weak follow-through, be careful of a counter-sell. Have that in mind. After the selloff tide ends, when the index stabilizes, and there’s resonance—then you need patience and wait for the right move.

II. Live Trading Breakdown + Stock Logic

In yesterday’s recap, I said the selloff tide is nearing its end. At yesterday’s late-session spot, funds rushed in early to grab shares and position for the game; I won’t judge whether that behavior was right or wrong, because everyone’s framework differs. Your every trade must have definition. If you’re doing arbitrage, or trading swings, then it’s fine to take a shot—no matter whether you make money or lose the next day, just follow discipline and exit. If you want to wait for a certainty-type node, then sit in cash calmly. Market up or down has nothing to do with you. Wait for the selloff tide to end, for the index to stabilize, for resonance to emerge, and then test the trade to get on the train. That’s the most basic short-term player’s mindset.

Yesterday the market accelerated into a selloff. Before the open, the Korea/Japan indices looked fairly steady, so the pre-market auction didn’t look as disastrous as you might imagine. Tech’s three major sub-sectors—memory, CPO, and PCB—opened red. Most of the high-momentum names opened well too. In the cycle’s three core names—Litong Electronics, Baoding Technology, and China Jushi—they opened near the 0 axis. The pre-market auction looked good, but what mattered was the opening trading volume. In the first 5 minutes, you could see the shrinking volume problem from the成交对比: the first five minutes’ volume was down 20% compared with yesterday. So at that time, you shouldn’t chase the spike in the tech direction—there’s the possibility of a “shrinking-volume fake cannon.” Sure enough, within the first half hour after the open, the trend basically stayed a pattern of震荡下行 (choppy but drifting down).

Looking further, on the PCB side, Guanghe Technology was the first to go limit-up and sealed it at 9:53, then immediately Shengyi Technology (PCB weight) rose and sealed the board. Both of these aren’t small “boards,” so funds wouldn’t come in to buy aggressively for no reason. When you see the realization of these two names, you should form in your head the expectation of “divergence in tech turning into repair.” But how strong that repair would be was unclear. This is the hardest part of today’s chart. If the repair strength is enough, I can wait for the right-side setup—halfway limit-up boards are fine. But if the repair strength isn’t enough, then you have to do low buys in strong names while the market hasn’t reacted yet and is still selling into divergence. Believe early, believe early—not after the halfway stage, when it rallies and everyone starts chasing. The difficulty of defining repair strength during a selloff tide is high, and it’s likely to be “strong divergence, weak repair.” So let me emphasize: during the selloff tide, the arbitrage and game must mainly be low-buying. Here I’ll use a trade screenshot sent by a friend during the day as a negative example. It looks similar in outcome, but the thinking is fundamentally different.

And the names with stronger early-session initiative weren’t the ones with high prior recognizability, such as Xianfeng Holdings and Huazheng New Material. That indicates funds’ buying strength wasn’t strong and the willingness to go long wasn’t high. This is one of the cycle’s three major characteristics—the most truthful mirror of symmetry. The人氣 core moved from主动走强 (actively leading strength) in the cycle’s main-rise phase, lifting the cycle upward; then in the selloff/tide phase the locked-in positions piled up, momentum dispersed, and repair couldn’t keep up. So stock selection for selloff-tide arbitrage is also very particular. Here’s a teaching for you—write it down.

During the selloff-tide phase, arbitrage setups generally won’t go for the earlier人氣 core names. Even though those earlier人氣 core names have high recognizability, precisely because they were so popular, they accumulated even more locked-in sell pressure at the top of the cycle. When you rebound during the selloff tide seeking repair, those chips become the biggest shorting force. So how do you choose instead? Here comes the key: judge by “durability to selling” (抗跌) when facing divergence. Remember these 5 characters. You can look at it from both daily and intraday levels. For example, if yesterday the market showed accelerated selloff tide and you expect that after another early-session selloff today there will be a decent opportunity to game, then when you were watching yesterday during the day you should find the time-share/interval that shows intraday “anti-drawdown” (anti-sell) traits. Then once selected, watch closely at today’s open. For instance, if you see Guanghe Technology and Shengyi Technology going up and then the market gives you another chance at a divergence selloff, that divergence selloff segment is the real “test stone.” I’ll use Dongshan Precision as an example here. Yesterday, across the whole market the selloff tide accelerated; among the many limit-down names, Dongshan Precision only dipped slightly over 2 points. That’s anti-drawdown. And today’s early-session divergence selloff kept Dongshan Precision basically doing high-position consolidation above the moving average. So if you want to low-buy and game early-session, Dongshan Precision is a very good candidate. China Jushi, by contrast, is more of a “chicken/awkward” choice.

During the mid-day close period, the Korea/Japan markets repaired and strengthened, meaning foreign capital showed long positioning strength. Then in the afternoon open, the tech direction was the first to be pushed up. Dongshan Precision was the first item to be lifted by funds to limit-up and seal. Now combine this with what I said above—doesn’t it suddenly become clear? Next came Hu Dian Shares and Jin’an Guoji. And only later did funds remember that there were still a few cycle core names that hadn’t hit limit-up yet and still had opportunities. So slow-reacting funds, and also greedy funds that were afraid of missing the move (踏空) and got jealous, gradually entered as well. Little did they realize they were helping the trapped funds inside get their exit liquidity. Meanwhile, the cycle cores hitting limit-up actually drew a perfect period at the end of the intraday rebound. Why? Consider this as homework for you. Actually, the answer is already embedded in what I wrote above. Friends, think more and reply in the comments once you understand—let me see your progress.

Near the close, Dongshan Precision didn’t blow up and then continued to rise. But China Jushi, and Baoding Technology—which lacked initiative—blew up. Once the core blew up, the intraday rebound topped out. Tech-direction funds continued to flee and covered oversold positions. With this round trip, it seems like your account has unrealized gains today—but things may not look so good tomorrow.

Although liquor, healthcare, real estate, and insurance didn’t rise much today and didn’t get many limit-ups, they truly helped in the second half of the session and at the tail-end rally. You can also clearly see the footprints of domestic capital positioning. Here I emphasize again one of the cycle’s three major characteristics: irreversibility. Since tech has already entered the selloff tide, the next big cycle will inevitably not be a tech-theme cycle again—this is a historical pattern. As for whether it’s liquor, healthcare, real estate, etc., I don’t know. The market will decide the direction in due time, but it won’t let you waste time in the already-ended cycle.

On the short-term side, heights are gradually being reopened without anyone afraid of the different-style regulatory disruptions. Hengshang Energy Saving didn’t fear the regulatory stir and executed a “reverse after opening” to go into a second limit-up (反包二板). This provides a model for the short-term big-cycle that might unfold later. Here I subjectively believe the trend phase is already over. After this, there may come a decent stretch of consecutive limit-up行情. But before that happens, still pay attention to the connection of smaller cycles. Many people might not understand why after a big cycle, there is often a wave of small cycles next. This question is actually very simple. A big cycle generally can’t kill down in a straight line for good in one shot. Profit-taking funds and missed-move funds also won’t all leave at once. There will always be some funds hovering inside. This is “stock of liquidity” (存量资金). Here you fire one shot, there you pull one hand—then it’s easy to pull out another wave of small cycle. Once those funds have had enough fun and can’t play anymore and they leave, then the next big cycle will slowly brew. Why is the main-rise core of the small cycle often a “wave-two” (二波) structure? You probably don’t need me to elaborate further.

III. Today’s Summary + Tomorrow’s Plan

In summary, the tech direction will very likely need to pull back and revisit lows over the next two days. Friends who entered today should make sure you realize profits and exit in time tomorrow, otherwise you may easily get trapped. Friends who didn’t get the meat today—don’t be anxious or envious. Everyone’s entry point differs. I didn’t move either; you just need to focus on opportunities that belong to you. It’s not that every trade must be profitable. Want everything, aim for everything, and you might get nothing. Keep watching for the connection between small cycles. When the tech direction pulls back again, and then works together with the index to form a volume-expansion resonance, that will be the truly certain opportunity. Today I screened some targets and found that Daheng Technology has been adjusting in the past few days and shows expectations of a wave-two structure, so I’ll place more focus on it going forward. Here we also need to make two preparations. If later you don’t see any names forming a wave-two structure and a decent run can’t be achieved, then that means there could be a direct handoff from big cycle to big cycle. In that case, just directly try the strongest name for a wave. The overall idea is basically this.

Today’s “heavy content” is still fully packed. I hope friends with real strength will give an extra boost—use your support ticket to help increase my人氣. Follow your framework; I won’t look at other directions for now. After a deep recap tonight, I’ll update my thoughts again. The link to the previous teaching article is placed at the end of this post; if you need it, you can read it yourself. Finally, I wish you all a smooth and long winning streak with my disciple Xiao Yao~

Professional Teaching Link:

1、《Deep Understanding of Cycles and Handoff Rules》