【Offensive and Defensive Tactics Strategy】——Pre-market Thoughts for March 25

Objective Information [Taogu Ba]

The market generally rebounded, with over 5,000 stocks rising and only 329 stocks falling. More than half of the stocks gained more than 3.5%. This fully aligns with our pre-market outlook yesterday, indicating a relatively elastic rebound. The Shanghai Composite Index and Shenzhen Component Index recovered about half of yesterday’s decline, but the trading volume across both markets shrank by approximately 350 billion yuan. The rebound mainly manifested in breadth rather than height; the market experienced a broad-based rally, but the explosive momentum within the day’s leading sectors was not extreme. The strongest rebound sectors were mainly oversold, with sector indices having experienced significant declines recently. Conversely, sectors like photovoltaic equipment and photovoltaic inverters, which have recently outperformed the market, showed some lower shadow lines later but still closed in the red, clearly weaker than the market.

In terms of short-term sentiment, Huadian Liaoning Energy advanced to 7 consecutive boards, matching the previous continuous boards of Yunnan Energy Holding. The attributes of green electricity, wind power, energy storage, and other sectors also received good momentum. Yunnan Energy Holding continued to approach new highs with a mid-level rebound. After a previous trading day saw a break or a surge in stocks, the short-term tolerance for errors has clearly increased.

Personal Thoughts

The rebound has significantly shrunk in volume. From a capital perspective, the logic behind the rebound is clear: the internal funds are exhausted and cannot continue to sell, indicating a rebound driven by exhausted bears rather than active buying power. The rebound itself does not indicate a recovery of market confidence, nor does it directly suggest a reversal. Although today’s recovery was not insignificant, the main reason was that the previous sell-off was too aggressive, not because market buying enthusiasm was strong. Essentially, this remains a passive rebound within an oversold correction; the medium-term downtrend has not been broken and remains clearly downward. However, after continuous extreme declines and the panic selling has subsided, the probability of another sharp decline tomorrow is low. The market is more likely to oscillate with small gains and losses.

Since there are no signs of a reversal or expectations of one at this stage, it should be viewed as a rebound with limited duration and scope. The best entry points are either at the end of the previous trading day or immediately after a high open and retest yesterday. If today’s inertia pushes prices higher and investors chase, the timing becomes awkward because it’s uncertain whether this rebound will last one or two days or extend to three. The first day’s rebound is the most certain, but its sustainability remains uncertain. Therefore, today’s rhythm favors managing existing positions rather than chasing highs. The approach should be to hold onto strong stocks and cut weaker ones, especially those that are highly momentum-driven. Core positions at the front of the intra-day trend are generally fine. Since the rebound may end and the market could continue to oscillate downward, the next one or two days should be a process of partial buying and partial selling—avoid greed and do not mistake this rebound for a reversal.

In terms of direction, power and computing sectors are relatively strong today, with power showing more proactive strength, reflecting a more aggressive stance, while computing is more of a pure oversold rebound. Looking at the stage, the power sector, especially with the European energy substitution logic, is likely to see more opportunities for repeated activity. The rhythm of these logical branches is not entirely synchronized, but almost daily, one or two branches rotate into focus.

Regarding short-term sentiment, as Yunnan Energy Holding approaches new highs and Huadian Liaoning Energy hits 7 consecutive boards again, the logic of low-position replenishment will strengthen, and the operational feasibility of ladder-like rallying from low levels will improve.