[Red Envelope] Stock Addict's Notes: You may not know me, but you've definitely heard of the emotional cycle theory

The darkest hour is over, and a new cycle begins. Today, I will continue sharing insights to teach everyone how to switch to the new cycle market with the “correct approach”! Seize every opportunity during bullish windows! Remember to like, follow, and support with a triple-click, walk the walk, and don’t freeload~ [Taogu Bar]

On the index level, today finally confirmed our emotional cycle theory’s short-term bottom signal: “shrinking volume stabilization (yesterday’s bearish exhaustion bullish) — volume expansion and continued repair.” As long as these two days follow our pattern rhythm and aesthetic, focusing only on “electricity + technology,” daring to buy on Tuesday’s gap-down dip, and confidently taking profits during the second climax at high levels today, I believe every student can welcome their spring! Our goal is to profit little or even avoid losses in weak markets, earn more when the market rises than most, and ultimately achieve stable compound growth with small profits and no losses!

Today’s Stock Enthusiast Notes Point 1: The top of the box + repair climax is the point to sell as you hit it
Many see a big rise and ignore risk, thinking big gains are opportunities and big drops are risks. They hope for immediate gains when buying and quick drops when selling, driven by human nature’s pursuit of profit and fear of loss—this is the psychological trap of stock trading. In reality, trading for a day should look at two days; focus more on environments with support and repair expectations for next-day trading, and less on environments with divergence and potential for continued decline.

For example, before this week, the market structure hadn’t changed; high consistency was hard to achieve. On March 18, even with a strong turnover like Sanfangxiang’s five-board, its chemical sector was all down limit, with various chemical, mining, oil, and gas stocks inexplicably falling. But after the five-board, there was no further strength. If you gamble on such a risky move and lose once, your account could be halved. Trend trading, however, allows many mistakes. Last Monday, the strongest was chemicals, which started to correct on Tuesday; Tuesday’s strongest was electricity, which also began to correct on Wednesday. ZhenNeng directly fell out of favor, and even Chint Power, which was very strong on Tuesday, didn’t explode under divergence and dropped nearly half a limit on Wednesday. The market’s pattern remains the same: the strong first day is often followed by a correction the next. Many trades during repair peaks are good selling points.

Why choose Demingli before the ice point last Tuesday?
A clear trend had formed. Small divergences that appear during this phase are good entry points within the pattern. The next day, big rotations and gains can happen. On March 18, Demingli, Baiwei Storage, Jiangbolong, and Xiangnong Xinchuang showed clear trend formation in storage chips. From March 13 to 18, storage was the strongest during the market’s weakest phase. Once the trend is established and the market begins to repair, it should strengthen further. So, during the small box structure, the ideal buy zone was near the 4050 bottom of the box, such as on March 17, when the technical indicator dipped below the ice point, and the index fell close to 4049, breaking the support at 4050. Under a good oscillation structure, buying near 4050 was optimal. When divergence occurs, front-load the buy points; the next day’s high-volume climax often becomes a profit-taking point. When the index approaches the top of the box at around 4150, be alert for collective profit-taking. If not taken at this time, the following Thursday and Friday could see continuous declines.

Given today’s environment with two days of large index gains and nearly 5,000 stocks rising, does this pattern still hold? What about the future?

Let’s move to Point 2: Foreseeing the future (pressure level projection)
A basic financial theory states: an effective breakout of resistance turns it into future support; an effective breakdown of support turns it into future resistance. Think about where the last support levels were for the index; those will likely be future resistance points. The closer they are, the more cautious we should be during the hit-and-run phase. The emotional cycle theory shares key levels today:
From far to near: last cycle’s support at 4050, the previous index gap at 3983, and this cycle’s downward gap at 3955 will all be hurdles during this repair phase!

Looking at recent resistance levels, the previous gap at 3983 and this cycle’s gap at 3955 are very close, meaning the pressure from these levels is significant. Today, the index reached 3931 after rising 130 points in two days—just one step away from the 3955 gap. Tomorrow, it might push higher again. If the market is in a box-bottom oscillation, and the support at 3800 held during two dips on Monday and Tuesday, then the index’s box range is “3800–3955.” The pattern becomes clearer: the emotional cycle theory’s rule: “The closer to 3800 during a decline, the more opportunities; the closer to 3955 during a rise, the higher the risk.”

Today’s second climax near the box top suggests it’s time to sell into strength! The simple rule: “After a climax, weaken the weak and hold the strong; avoid opening new positions; focus on hitting and withdrawing.”

If yesterday, you chose Changfei Optical Fiber + Guangku Technology based on the pattern, could that +8.5 surge in Guangku Technology have tempted you to hold?
No, because as a trend direction, the US market’s CPO surged strongly last night, showing high consistency. The large-cap stocks like Yizhongtian didn’t move much yesterday, but today they rotated and caught up. However, the high open and immediate overextension exhausted expectations, leading to a collective gap-down at open. Guangku Technology, as a core stock, opened strongly but couldn’t sustain the momentum, so I would reduce attention after it failed to hold the moving averages. Once it broke the moving averages, I would unfollow. The trend and sentiment act like a seesaw: technology stocks, as trend leaders, opened high but fell, strengthening sentiment. That’s today’s market structure.

Why is Changfei Optical Fiber still doing well?
Here are some exclusive insights:
First, off-market potential buyers supporting the stock, such as nodes of potential buy-in. At open, the market showed volume continuation and bottom formation. After Huadian Liaoning’s move, the stock continued to rise, indicating a resonance at the bottom. Yesterday’s bottom-first move was a sign of potential for a rebound.
Second, expectation opposition: the market’s electricity sector showed a stronger structure, but does that mean funds will heavily favor electricity? Not necessarily. Otherwise, stocks like Yunnan Energy, Jinkai GCL, and others wouldn’t fall back or plunge. Funds often switch to other themes that can resist declines during divergence, such as technology, military, or related sectors.
Third, viewing weakness as strength: early in the day, CPO opened high and then fell sharply. Guangku Technology and Changfei Optical Fiber both had strong opens, but their reactions to retracement differed. Guangku Technology broke below the moving averages, while Changfei held the moving averages and continued to new highs. The strength of the market indicates whether to wait longer or act immediately.

Stock Enthusiast Point 3: Foreknowledge and opportunity—where are the risks?
Risks only arrive late, not missing entirely. With nearly 5,000 stocks rising for two days, it’s crucial to stay calm. Profits are endless, losses are finite. Some people might have missed the electricity and CPO core stocks but gained small profits elsewhere, feeling strong FOMO. That’s why volume surged yesterday—because they missed out.
Tomorrow, if you’ve already bought everything, who will take the next step? Besides the pressure at 3955, the closer to it, the more you should be cautious during the hit-and-run phase. Also, consider the potential new “Long” stock “HuaDian Liaoning” that some teachers might hype. If this small repair cycle is driven by HuaDian Liaoning, then its divergence during this cycle could mark the end of the small cycle. I believe everyone watching the screen agrees, right?

Further analysis: Why did HuaDian Liaoning open high and accelerate without restraint today?
Because last night’s abnormal move had no regulatory blackouts!
Based on past experience with high-flyers:

1. They thrive on divergence but die in acceleration;
2. Friday is traditionally a high-flyer’s “passage day”;
3. Four consecutive similar directional moves.
   Today, HuaDian Liaoning’s volume-price pattern shows the first volume contraction with acceleration, approaching Friday’s traditional high-flyer “passage day.” Tomorrow, Zhongyou Capital, CCO Eagle, and others will face four similar directional moves. If they open higher or try to accelerate again, beware of divergence among funds, possibly pre-empting the cycle’s end. The high-flyer’s divergence and acceleration could lead to an early realization of the cycle’s risk. All old-cycle stocks like Yunnan Energy, HeFuchina, and others are showing signs of retreat, characteristic of “old cycle” stocks.

But some newer faces like HuaDian Liaoning and HuaDian Energy show less divergence. So, our conclusion: Avoid old-cycle stocks entirely; embrace the new cycle and the switch.

How to embrace? Today, our emotional cycle theory continues to teach a few key secrets!

Part 1: Focus on these key points for high-low node switching!

1. The top of the index turning down (e.g., 10.31 Pingtan Development, Straits Innovation first-board node);
2. Major divergence or break of high-flyer stocks;
3. Suspension days of high-flyer stocks due to blackouts;
4. Emergence of new impactful themes.

Currently, the key nodes are Tuesday’s index bottom first-board, meaning today’s second-board will be a focus for capital consensus. Future Thursday or Friday’s big divergence or break could be the second first-board node, both indicating a switch from high to low. High off-market buy-ins increase success probability.

Part 2: Effective transfer and separation of high-level volume
This part is lengthy but crucial. Check my previous Tianji shares for details. Pay attention to whether, during divergence, low-priced stocks are actively separating—rising against the trend. Students who learned our “Earth Pile” first-board tutorial should be alert. For example, today in the afternoon, when Yunnan Energy’s stock plunged, the stocks most tightly following the trend were GCL, HeCai, and SNa. Did any show signs of separation?
Yes. After Yunnan Energy’s plunge, the first to reverse was “CNOOC Capital,” a financial carrier. Next was “ReisKanda,” a CPO sentiment stock. This indicates that early divergence signals are present, and if the electricity sector’s second climax diverges with the index, the “financial + technology” sector will likely lead the rotation.

Is tomorrow’s rotation opportunity in financial and tech stocks?
Hmm, I think not. Simply put, what leadership can financial stocks have? The recent performance of tech weights has been lackluster. Our core idea remains: follow the most profitable theme. The strongest theme is HuaDian Liaoning, with the core concept of power grid coordination. The bottom resonance theme will also end with this cycle.

So, our approach is: “Don’t shoot the eagle before seeing the rabbit.” As Lao Zhao said, “First and second boards reveal the true leader!” Can we tell the core from two days of 5,000 stocks rising? No. We can only see that in a strong environment, early second-board stocks are the front runners, with slow, steady boards throughout the day, and explosive volume after 10:30. The real test is the “divergence adjustment day,” which reveals who is strong or weak, and whether new faces at low levels can separate from HuaDian Liaoning. Watch if high-volume transfer from high to low occurs, or if old-cycle stocks like HeFuchina continue to reach new highs.

In the coming days, patience is key: wait for profit-taking, watch for divergence near 3955, then look for new switching opportunities. If you can wait patiently for the box bottom and technical ice point, a second dip can be an effective way for large funds to position mid-term!

Market sentiment temperature: 87°C

Data Summary:
Number of stocks up/down: 4874/560
Number of limit-ups: Tuesday 83 / Wednesday 84
Limit-up success rate: Tuesday 78% / Wednesday 83%
Number of limit-downs: Tuesday 1 / Wednesday 1
Total market turnover: 21,931 billion, up 968.3 billion from previous day

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Stay true to your mind and heart. Wishing everyone steady and long-term success on the trading journey.

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