[Red Envelope] The market is playing out according to the script. Even the Reversal Star says there's an opportunity. Do you believe it?

Hey guys, recent market conditions have indeed been “beyond expectations,” and I believe they’ve exceeded most people’s expectations. However, it’s only a weak surpassing. Currently, short-term sentiment has entered a state of blind disorder, with no one daring to hint at opportunities! But I still have to tell you in an untimely manner: opportunities are coming!!! Why am I so confident? Aren’t I afraid of being proven wrong? I hope I am proven wrong. Before being proven wrong, let’s look at the basis of this view?? [Taogu Bar]

“Talent will never surpass experience.” Based on past experience, the first strong recovery after panic usually shows collective gains, euphoric sentiment, and accelerated sector rotation, which is Tuesday. But then, it’s easy to see chasing highs and killing lows, because after experiencing panic declines, market sentiment is extremely fragile, funds are wavering, and even a slight disturbance can trigger collective panic selling. The recovery phase will enter a repeated clearing stage: marginal sectors and individual stocks are gradually eliminated by the market, so recent chasing and killing tend to cause large fluctuations, mainly on Wednesday and Thursday. Currently, the index has formed strong support around 4000 points, and the bottom of sentiment is being repeatedly built. The key market turning points are approaching. However, before this critical point arrives, the market will still go through a painful phase of extreme killing sentiment. Only when sentiment is thoroughly “subdued” and market sentiment stabilizes will a phase of clear, sustained upward movement follow.

First, let’s talk about market rhythm:
Yesterday, I reiterated my view: to truly find opportunities, one should wait for the index to fall to the bottom again, and only when a second leg appears will there be a suitable chance. As expected, the market plunged sharply today. For the specific analysis, you can review yesterday’s post; I’ve been writing the script almost every day. Please give a thumbs up after reading.

Key points:
What was the key signal yesterday? The rally in the index did not show volume increase, indicating that there is no capital wanting to enter the market, because everyone thinks the higher it goes, the greater the risk. In the afternoon, there was another attempt to push higher, but it couldn’t sustain, showing that more and more funds believe that strongly pushing the index is not advisable. Only after a decline and panic selling will funds be willing to re-enter. This behavior of failing to push higher will gradually become a consensus. Therefore, a slight decline in the index = a stage arbitrage opportunity; a sharp decline = a good opportunity is coming!

Sentiment aspect:
Regarding sentiment anchoring, yesterday I shared a practical knowledge point: look at the “consecutive board upgrade rate.” Using this, I advised patience and waiting for the market to hit a bottom. Today, this can still be applied: let’s look at today’s top board upgrade rate. Today, even stocks like Tiandi Online hit the limit down, with a low upgrade rate. When high-level stocks hit the limit down, do you think market sentiment will improve? Clearly, it’s hard to improve.

As for tomorrow, the current market has a turnover of 21,762 billion yuan. According to liquidity cycle principles, if the turnover reaches around 20 trillion, a liquidity exhaustion rebound is likely. However, today, the market has started to show some signs of activity in aggressive sectors. If tomorrow there is a volume reduction and a decline, sentiment is likely to undergo a weak recovery. Why weak recovery? Objectively, the last decline saw no funds entering, so we can treat it as no funds entering. If there were funds, that would be even better.

Commercial Aerospace:
On Friday, I judged that commercial aerospace was beginning to stabilize and rebound. I paid attention to the aerospace rebound, and after taking profits yesterday at the high point, I focused again on the decline. This was a relatively comfortable approach this week, as I judged early that commercial aerospace was stabilizing, and I was not disturbed by any fluctuations. According to my yesterday’s thinking, commercial aerospace might ferment during the holiday, so if there is a big drop today, it could be an opportunity to buy low. My approach centered around yesterday’s break, with stocks like Shunhao Shares, Aerospace Development, and Shenjian Shares breaking the board yesterday. Today, I focus on stability and continue to roll into Aerospace Development and Shunhao Shares. The strategy and rhythm are quite good; almost no one could predict that the rebound after yesterday’s break would be a positive feedback for stocks like those, while most chase highs. I prefer low-risk buying, only fighting when safety is assured.

For tomorrow, funds started to repair positions early in the close. We can see that Julli Rigging, Western Materials, and low-position Aerospace Technology all showed some recovery at the end. If tomorrow there is a direct strong recovery, it’s a preemptive move because the market currently expects only weak recovery. It’s easy to see a phase of recovery followed by a sharp pullback, which tests stock-picking skills. Chasing highs is even more inadvisable now; almost no one can safely survive chasing high in this market. For those without a preemptive position or with poor stock-picking skills, patience is recommended.

AI Application Sector:
Yesterday, I emphasized Blue Cursor. I mentioned that Blue Cursor’s direct recovery is not the focus; it’s a technical rebound. If it stabilizes after further decline, funds will continue to gamble on AI applications. Patience is needed for Blue Cursor to stabilize as expected. Was today’s morning trend exactly as I described? Those who focus on this should pay attention. I can point out the pitfalls I see; just like I said before, application sector dips need to be filled, and those who read the posts can completely avoid these pitfalls.

Today’s performance in the AI application sector shows active consolidation. Serious traders should notice that Tianxia Online and Zhejiang Wenhulian performed beyond expectations, and the market also saw Tianxia Online hitting the limit down. So, we only need to analyze the expectations for active consolidation: first, the consolidation expected by everyone; as a sniper, I believe it’s not difficult for you, unless you’re not a sniper;
second, the sector shows active consolidation, especially at high levels, indicating that the high position of the AI application sector is still continuing. The market has begun to have expectations for this sector. Today’s first boards, like Yaowang Technology, 263, and Xinhua Du, are low-priced stocks. If tomorrow’s opening shows a clear one-word signal, consider arbitrage opportunities in low-capital growth stocks or stocks that have stabilized after adjustments.

Photovoltaic:
I already gave the answer about the photovoltaic sector yesterday. Many said it was the strongest sub-sector with the most sustainability, but I focused on one key point: the market environment. The market environment outweighs everything. Currently, it’s a market of quant harvesting. When a sector peaks, chasing it the next day often leads to losses. Yesterday, I also considered focusing on photovoltaics, but after thinking, I saw no clear expectation. Why? Because Tuesday’s commercial aerospace was strong enough, arguably the strongest breakout this week, but it didn’t show good sustainability on Wednesday. Why should the photovoltaic sector, which was weaker than aerospace, necessarily have sustainability?
Today, the discussion is about negative news, which aligns with my experience: after panic declines, market sentiment is fragile, funds are wavering, and even slight disturbances can trigger collective panic selling. But today, I still paid attention to Xiexin Integration (possibly without a premium), because my thinking yesterday was: if photovoltaics open with divergence tomorrow, after those chasing high today sell, I will consider low points for trend-based low buying. So, I’ll focus on stocks with lower attention and consistency.

The biggest discussion about photovoltaics is the genuine negative news issue. Many companies issued clarifications, stating they are not engaged in related businesses and have no orders on hand, which is a major reason for today’s divergence. Simply put, either don’t participate or participate by digging into genuine stocks that show strong signals for right-side arbitrage after a clear breakout. But I know the capabilities of our fellow investors here well. Maybe it’s better to wait and see? Hopefully, tomorrow Xiexin Integration can show a good positive feedback, so we can capture the core in this sector.

Thanks to friends who support and tip:
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