[Red envelope] Continuous sharp pullbacks are rewards for our support at the 3800 level, pay attention to this tomorrow!

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

Artist’s Recap:

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In the analysis of the index on the 23rd, I clearly predicted that the index would show a broad rebound the next day. Sure enough, the next day saw a direct surge, with sentiment significantly warming. These correct insights are based on an accurate grasp of market rhythm, including small details during trading and the underlying logic behind them. If you had followed the bottoming with funds at the end of the 23rd, these two days have been a gradual harvest. Previously, I kept reminding to stay out or hold light positions, which helped avoid some declines. Overall, this has resulted in at least 40% volatility, allowing you to steadily outperform 98% of the market.

Yesterday’s recap also predicted that the index would continue to strengthen today. As expected, the index remained strong. The only shortcoming was not anticipating that, despite shrinking volume, the index could still maintain some strength—mainly due to unexpected news from the US, which caused a deviation in the pre-market preview. However, the analysis, though delayed, remains valid. A pullback for confirmation is definitely coming this week.

After a short-term rapid decline, many funds had already exited positions, missing yesterday’s rebound. Today, with positive external factors, there was a strong willingness to buy, so the index continued to stay strong. However, looking at volume, the current market is still relatively thin—2.18 trillion yuan isn’t enough to support a full reversal. We can see from the index that there are gaps above and below, both operating below short-term moving averages. Reversals are unlikely to happen immediately. Among the two gaps, the downward gap offers less resistance for filling, so attention should be paid to the possibility of a pullback. If the index confirms a pullback and then moves higher, a good rebound could follow. In the late trading session, the index was slowly rising, with some funds still active. Based on this, there’s still an expectation of a push higher tomorrow morning. However, continuous broad rebounds and shrinking volume, combined with profit-taking from short-term bottom fishing, and the acceleration of the power sector, pose risks of a high-level double-top and regulatory risks on high valuations. The probability of a rise followed by a fall tomorrow is higher, so caution is advised.

Market Analysis Today:

From the index perspective, external oil futures continued to plunge, US stocks stabilized, and combined with sharp gains in Japan and Korea, the situation temporarily eased on the news front. After a high open, the index continued to rise gradually. In the first few minutes of pre-market and opening, the index showed a volume-driven upward trend. After climbing steadily, it entered a plateau around 3945, oscillating sideways. In the late session, the index attempted to push higher again, finally closing at 3931.84, marking two consecutive days of broad rebounds.

Volume-wise, the total turnover was 2.18 trillion yuan, up 4.66% from yesterday’s 970 billion, a slight increase but still in a shrinking volume state compared to previous levels.

Sentiment-wise, 84 stocks hit the daily limit up, 1 stock hit the limit down, 4615 stocks rose, and 521 fell. Yesterday’s limit-up stocks averaged a 4.49% increase today, showing clear signs of recovery and a strong profit effect, especially for short-term traders, as the board-hopping gains are generally attractive.

Sector-wise, the market continued its broad rally, maintaining high levels throughout the day. Early on, the electric power sector, especially the collaborative power concept, strengthened further. Huadian LiaoNeng hit 8 consecutive limit-ups, with other stocks reaching new trend highs. AI hardware also opened high and continued upward, with Changfei Optical Fiber hitting two consecutive limit-ups. The computing power concept was active, with multiple stocks rising, and storage sectors also showed signs of recovery after a short correction. In the afternoon, military industry stocks collectively moved, with Northern Long Dragon surging about 15%. Overall, the market showed a strong rotation pattern, with high short-term enthusiasm.

Artist’s Sector Talk:

1. Military Industry
The military sector has been active for two days, mainly driven by news. Recently, the neighboring Japanese market underperformed, frequently appearing on the headlines, which is the core driver behind the continuous movement of the military sector. Given the news-driven nature, the sustainability and strength are hard to predict. The sector is currently in an oversold trend, and since it’s oversold, it’s likely just a rebound triggered by external news. This is within the scope of early belief and speculation. If you were confident yesterday, it was better to participate then; trying again today may not be cost-effective. Currently, stocks like Hunan Tianyan and Great Wall Military have hit two consecutive limit-ups, showing a bottomed-out rebound. A three-day streak is difficult, and the risk-reward ratio isn’t high. Future observation of sustained news stimuli is recommended, and only when the sector shows signs of a reversal should participation be considered.

2. Oil & Gas Chemicals
Trump continues to push for a one-month ceasefire, causing external oil futures to plunge. No signs of a rebound in oil prices are visible yet. The chemical sector remains weak, with stocks like Jinniu Chemical oscillating below the waterline all day. When Yunnan Energy’s stock plunged at the close, Jinniu Chemical showed a clear rush to buy, indicating attempts to repair the divergence with power stocks. The main goal now is to test the divergence in power sector, hoping for some recovery. Although divergence is expected, the magnitude remains uncertain until it materializes. For now, focus on Jinniu Chemical to see if it can lead a sector recovery.

3. Power Sector
The power sector continued to strengthen today, especially the power and computing synergy concept. Huadian LiaoNeng successfully broke through 8 limit-ups, with a quick surge aided by low-position support. Yunnan Energy Holdings opened high and moved steadily, but near previous highs, it weakened and even declined in the late session, dragging some stocks down. Fortunately, Huadian LiaoNeng maintained the limit-up, quickly recovering. This suggests Huadian LiaoNeng’s safety might be higher than Yunnan Energy’s, as it was unaffected by the latter’s weakness. There’s a trend of Huadian LiaoNeng replacing Yunnan Energy as the new leader. The sector accelerated yesterday and again today, increasing divergence expectations. Without strong backing, subsequent declines could be swift. Many stocks are already in a second-wave trend, with profits accumulated, so caution is advised. Especially with Huadian LiaoNeng under regulatory scrutiny, the final trend is uncertain. The plunge of Yunnan Energy also hints that some mid-cap stocks are more vulnerable, suggesting focus on low-priced first-board stocks for safer plays.

4. CPO/Fiber/PCB
Last night, US stocks’ optical communication chain surged, leading to high opens in optical modules, fibers, and PCBs. Fiber optics performed better than modules, with Changfei Optical Fiber and Tongding Interconnection hitting two consecutive limit-ups. The overall sector remains an oversold rebound, driven mainly by established stocks with clear recognition. No new leading stocks have emerged yet. The main market theme still revolves around power, with other sectors showing market rotation. The shift from weak to strong rotation indicates a passive upward movement, favoring low buy-in points rather than aggressive trading.

5. Computing Power
The computing power sector performed well this morning. Aori De directly hit a limit-up during bidding, with significant order additions afterward. Meili Yun, which had a weak-to-strong signal yesterday, was actually unreliable—bidding from below and jumping up, lacking confidence. The sector’s stocks with clear recognition, like Aori De and Meili Yun, are not very aggressive, showing a lack of courage and initiative. Li Tong and Da Wei are more like oversold rebounds. The recent market rotation is a rebound under rotation, with limited sustainability and strength. Focus on low-priced core stocks for low buy-in, waiting to see if leading stocks can establish a strong trend to lift the sector.

Every morning, I share news and key stock picks. Follow the artist, stay on track, and avoid getting lost. The morning content is based on my market expectations! Please like the posts, tip, or support with points!

We’ve heard many big theories and market principles, but many still don’t know how to implement them. So I share my “Strength Pyramid System,” which can bring growth and value to you—worthy of your serious attention. Those always seeking zero-cost free rides 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 the market will evolve, and so will our “Strength Pyramid” system. In the future, as markets change dynamically, I will add new “dimensions” to it, making it more adaptable to different market cycles.