[Red Envelope] Yesterday's review successfully predicted the index's surge and pullback, retracing the gap, and landing smoothly!

Short-term trading is an art. It uses the ever-changing market as a canvas, sharp insight as a brush, and decisive execution as paint. True masterpieces are not born from chasing random fluctuations but are created through precise capture and resonance of the market’s core “strength”—drawing directions at emotional peaks, structuring during sector rotations, and ultimately adding the finishing touch at the moment individual stocks lead the rally. ————Compound Artist[Taogu Ba]

Artist’s Recap:

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Today, after a slight dip at the open, the index showed a rally attempt, then started a continuous decline with little resistance. Did yesterday’s recap predict this trend? After a quick rise in the morning, I exited decisively. If you held positions in electric power stocks, you could have done a quick intraday trade. It’s not an exaggeration to say that those who picked the right stocks for intraday trading could easily make 10% profit. Recaps are meaningful and very helpful for trading. In such a weak market, analyzing the overall trend, catching every small rhythm, avoiding big drops, and seizing rebounds—wouldn’t that be wonderful?

Yesterday’s electric power recap warned of mid-level risks. Were you scared by today’s sharp morning decline? I mentioned in the recap that there would be a rally, so quickly selling mid-level stocks helped avoid bigger losses. Even if you didn’t re-enter later, you sold most stocks at relatively high intraday levels, minimizing losses. Yesterday, I said Huadian LiaoNeng was much safer than Yunnan Energy Holding. Today, Yunnan Energy stayed underwater while Huadian hit the daily limit. Looking at low-priced stocks, some made multiple entries and exits today, and from the trend, they performed much better than high-priced stocks. Following this logic should prevent major issues.

Today’s index experienced an extremely low-volume decline, filling the downside gap. Replenishing the gap with less resistance than the upside gap is easier. Trading volume has dropped below 20 billion yuan, making further decline difficult unless there’s a quick sell-off triggering panic. Given current market sentiment and external environment, another big drop seems unlikely. The index is relatively safe at this level. Also, recent recovery is a rebound, not a reversal. The likely future is a sideways oscillation before a clear direction emerges.

Electric power sector divergence was significant today, with some recovery and pullback during the session. Tomorrow, divergence may continue until the market finds a new main theme. If the opening shows clear divergence, intra-day recovery chances increase. No need to panic at this point.

Market Analysis Today:

From the index perspective, the external rebound momentum has eased. After a slight dip at the open, the index rallied briefly, consistent with yesterday’s forecast. The subsequent decline confirms a one-day downtrend. The correction was sizable but less panic compared to before, with some resistance around 3890. In terms of volume, the total turnover was 1.94 trillion yuan, down 10.84% from yesterday’s 2.362 trillion yuan—extremely low, even below 20 billion. Market sentiment shows 39 stocks hitting the daily limit up, 8 hitting the limit down, 877 advancing, and 4234 declining. Yesterday’s limit-up stocks averaged a 0.9% gain today, indicating a clear profit-taking effect. Short-term, some positions are showing floating losses, mainly due to yesterday’s high market enthusiasm and today’s electric power sector divergence, leading to some weakness.

Sector-wise, the market is in a weak rotation phase. After a broad rebound, it’s now broadly declining. Electric power remains relatively strong, with low-priced stocks showing some strength. High-priced stocks’ intra-day divergence and subsequent pullback have impacted sentiment. Lithium batteries, commercial aerospace, pharmaceuticals, robotics, and chemicals sectors are all weakly rotating. Overall, the market is still trying to find a main theme, experimenting across sectors but lacking strong momentum.

Artist’s Sector Commentary:

1. Military Industry
Yesterday’s recap mentioned a bottoming oversold rebound. Given current conditions, sustained rallying is unlikely. Today, the sector also declined with the index, including top stocks like Hunan Tianyan and Great Wall Military, which broke their plates. The sector appears to be a short-term oversold rebound without much left-side value. Future news could trigger some stimuli, but randomness dominates. It’s worth observing, especially since the situation remains grim and some extreme trends are emerging. A reversal driven by news isn’t impossible, but overall, focus should be on right-side signals and waiting for confirmation before attempting to play.

2. Electric Power
Yesterday, the electric power sector already showed signs of divergence, so today’s divergence was predictable. Leading stocks like Huadian LiaoNeng quickly reached a double-top, and once downward momentum appeared, mid-cap stocks also showed larger divergence. Yunnan Energy’s pre-market performance was poor, while Huadian managed to stay relatively strong, even hitting the daily limit. The market’s focus on Huadian allowed it to lead, with some stocks gaining over 12 points intraday. If funds can exit tomorrow, profits are guaranteed. The late-day drop in Huadian might be profit-taking. Watching whether Huadian opens higher tomorrow and continues strength is key. Compared to Yunnan Energy, Huadian is safer, and at this stage, more participation isn’t necessary—just use it as a sentiment anchor. Keep an eye on low-priced stocks and the first-board stocks today. Uncertainty remains whether Huadian will release negative news over the weekend or if external shocks will intensify.

3. CPO/Fiber/PCB
Huagong Tech’s early trading was immediately hit with a limit-down, affected by weaker-than-expected earnings. Although its position isn’t very high within the sector, it still impacts overall sentiment. Fiber sector also showed weakness; Longfei Fiber hit a new high then started to plunge, Yuanjie Technology also peaked then declined. The overall pattern suggests institutions favor new highs followed by adjustments, not continuous rises. The recent rebound has been driven by sector rotation, not chasing highs. The sector’s recovery strength is slightly better than the index’s, so if the index stabilizes, participation can continue.

4. Computing Power
The computing power sector lacks sustained strength or high points. Today, Aoruid failed to hold the board (Da Zengzi entered), and Litong Electronics also failed to go from one to two. The recent movement is mainly sector rotation, with stocks bouncing like whack-a-mole. No clear entry points are visible; it’s more about waiting to see if core leading stocks can show strength. Without a leader, the sector can’t form a good trend.

5. Commercial Aerospace
In early trading, Zhaojin Technology and Zhongchao Holdings opened with a single limit-up. The sector’s early move was mainly driven by SpaceX news, which is unpredictable in impact. The sector weakened early, with multiple stocks hitting limit-downs. Near the close, electric power sector divergence persisted, and aerospace stocks tried to lift the sector. Whether it can produce a rebound is uncertain; it’s mainly trial-and-error with small positions. The first movers were Shenjian and Xibu, which led the rise, followed by other stocks. Since it’s a trial, priority is given to stocks that lead the board.

Daily morning updates include core stock picks and market expectations. Follow the artist, stay on track, avoid getting lost. The morning content is mostly my analysis of expected sectors. Please like the posts, tip, or support with points!

Having heard many market philosophies and theories, many still don’t know how to implement them. That’s why I share my “Strength Pyramid System,” which can help you grow. It’s worth taking seriously. Those who always want free gains will stay on the surface of trading and miss the core logic of profits. The purpose of sharing is to help those who follow this post not feel lost. But markets evolve, and so will our “Strength Pyramid” system. In a constantly changing market, I will add new “dimensions” based on different conditions to better adapt to various cycles.