3.30 Suddenly turning around, the three founding elders are no longer at the dimly lit corner.

[TaoGuba]
At the very start today, the two top dogs of the power sector—Hua Dian Energy and Hua Dian Liaoning Energy—went out and got knocked flat on the ground. At the same time, the much-watched Yu Neng Holding once again returned to the risk warning list (to put it plainly, this person has character issues). Under these circumstances, the three old-timers of the power sector all face a total wipeout at the same time.

    It made me, at market open, first go stare at the competition among the second board stocks—watching who can “compete” for the higher spot today and become the next补涨龙. **But when I suddenly look back, those three old-timers are no longer in the place lit by the lamps.**  

   Alright, let’s get back to the proper, serious style. In reality, at today’s open, during the call-auction phase, what I saw was that the original three picks were going to compete for the補涨龙. **Originally, the one I liked most was Guangxi Energy.** Because, for it, on Friday itself it should have been the hardest board to top. But I had warned about it before too: **its biggest core problem was that its original order book size wasn’t enough—if today its buy orders didn’t meet expectations, then it would most likely have to open the board again.**  

Another issue is that Jinmei Co. immediately slotted in and cut Guangxi Energy off right at the open. So for Guangxi Energy, if its order book can’t quickly and sharply increase, then it already has no chance—it gets eliminated.

（The part below is what many people can’t figure out: how I judged that Guangxi Energy couldn’t be bought in real trading.）
Alright, as expected, today happened just as I said. Because when I saw it open high and hit the opening snap-up board, that part was fine. But its trading volume and the amount supporting the封板 itself were not enough. If I’m not mistaken, when it first got封板 it was only about 230 million—maybe. Later, on the board, it actually also briefly opened again for about three seconds—I think. Then it re-closed, and at that time the封单量 was around 400 million. When I placed my order, I was selling at around 4% points—yet it didn’t get filled. Because at that time, those three old-timers were already down on the ground. I immediately canceled my order without hesitation.

Since I’m the one who trades on premium for emotion-type stocks. My system’s risk control tells me that today, no matter what stock it is, I’m not allowed to open a position.

So the planned high-flag stock—Hangdian Co., Ltd.—couldn’t go, and I just had to watch it go up to the board. And it also lifted other related stocks in the optical communications space to get onto their boards. From the perspective of optical communications, actually, in terms of following an institutional-stock rhythm today, today was a good rhythm. You can look at tech-type stocks—actually they’ve been pulling back for four straight days. From the rotation angle, it’s highly likely they’ll rotate back to it again. So you’ll see that in optical communications, some stocks continued to come out onto the rotation today, including Datong Jun’s Fei? (Changfei Optoelectronics), so strong, that damn fool.

Actually, for Dongshan Precision, I could already see it touching the five-week line, and my layout panel even popped up a reminder—but I still didn’t buy. Discipline doesn’t allow it; please understand. (This is a swing-trading method.)

Everyone, look at what sector boards came out today, and compare it.

Of course, some people here will mention another sector that has been relatively strong lately: the pharmaceutical sector. For me, after the pharmaceutical sector broke through six boards, I probably started observing it around then—rather than now. Because no matter which angle I look at the sector chart, it doesn’t look like a “big trend” kind of pattern. It’s clearly just a dead-cat bounce after oversold.

I’ll give a plan for how to observe whether a sector has entered the “decoction” (retreat) period. When the original emotional flagship falls hard, you need to go look at the strength of its mid-tier stocks, and also the strength of its low-tier stocks—to judge whether the sector has ended and whether there’s a possibility for buying the dip. But I didn’t see this phenomenon. Just look at the list below and you’ll know.

After I reviewed these tickers, I knew that basically the whole power sector should be in retreat mode. Otherwise, today would have been a good buy point for a core “buy-the-dip” ticker. Many people don’t understand—then why don’t low-level tickers rally upward and push the high-level tickers? In this situation.

Here I’ll share a practical nugget about fund flows:

When high-flag stocks and mid-tier stocks collapse across the board, wouldn’t short-term funds get trapped in there? So tell me: if they get trapped, where would the money come from to push the low-tier stocks up in the opposite direction? If you’re the person on the sidelines—watching one sector’s high-end and mid-tier all show negative feedback—would you buy? Okay, then you’ll see that whether it’s the low end or the high end, there are no bulls. It’s all bears. Can it not keep falling? Tomorrow.
So in this scenario, whether it’s low-tier stocks or high-tier stocks betting on a reversal and re-claiming the board, it’s unreasonable.

First, let’s collect all the info we can:

1. When the index opens, it’s in a relatively decent position—there isn’t too much index risk. It matches the original assumption that it should be in a range-bound consolidation state.

2. For the main-line sector: all three of the most core tickers hit their daily limit-down; the main line has already weakened, and other sectors should rotate out;

3. Today, Hangdian Co., Ltd. is the core of the “grouping” among the high-flag stocks. Actually, if you absolutely want to say there’s still a ticker that might be traded today, it’s only this one. The rest don’t really matter. Because for grouped-type tickers, if negative feedback is bigger tomorrow, the grouped stocks should continue going up. I’ve talked about this logic before: when there were four lanes and suddenly three lanes get blocked, leaving only one lane—won’t that remaining lane become even more congested, with even more people and money—thus pushing that grouped stock upward in reverse?

4. Tech stocks that have been adjusting for four straight days start to rotate a bit. The most typical example is something like Changfei Optical Fiber—somehow it even hit the daily limit-up. That’s great. Whether it can form a small cycle—uncertain.

5. Actually, today there’s another sector starting a rebound. Take a look—that’s gold. The reason is fairly simple: mainly, gold futures have temporarily stabilized. And that sector should have a repair expectation here as well. In everything, it’s just most afraid of “but/then” (i.e., the worst-case). Because if crude oil prices keep rising, it would explode all the shorts. So the first thing that gets sold isn’t gold? Including things like natural gas, and so on—those all must be sold first.

6. Some people can’t understand why aerospace is moving a little over these past few days. Aerospace itself is driven by news catalysts. In this kind of market, the momentum is basically not sustainable. According to what I see, it’s just that Musk—the big talker who blows smoke—says his crappy company is preparing to get listed. Americans just love telling these tall tales with no consequences, stories they themselves don’t even believe, and they still want you to believe them and then pay the bill by buying. What about his $1.5 trillion? I don’t even understand what it means to value a company at $1.5 trillion when its annual revenue is nowhere near that—does that concept even make sense?

7. Everyone, do you see these new industry seed-sector and grain stock names coming out? Observe our A-share history: whenever seed industry and grain food stocks come out, it’s very likely the market is in a bad state. That qualifies as a kind of clear hedging sector. Consumption-type sectors are about the same probability too.

My own trading is very simple: I directly sell out and clear the position:

Why does Tianhua Xinneng still show some resistance? Because that ticker wasn’t something I bought casually. It still has some meaning. But from the perspective of my buy expectations: the lithium battery sector hasn’t strengthened—so I’m leaving. The key is that it even made me lose an entire 0.5 percentage points. Too much!

Sometimes I’m thinking now—should I not buy stocks on Friday? I’ve bought stocks on Friday for three straight weeks, and they all lost money. It proves that this Friday node has a problem for buying stocks. This week, no matter what you say, unless you’re a leader, I’m definitely going to clear out all the stocks entirely on Friday. That’s too much. At least give a little face, right? After all, we’ve had these years of feelings together.

About my strategy for tomorrow:

1. Tomorrow I’ll analyze: most likely the power sector will continue to decline, so there won’t be any buy points—most likely.

2. If the three most core tickers show signs of bottoming and stopping the decline, then of course that would be best. If not, then I think it will directly head into a second-level retreat (decoction).

3. I think Wednesday is a good buy point—but only if a true capitulation/“ice point” happens. That’s when I would buy. As for what types of stocks to trade—I’ll pick them from the first-board stocks today.

4. （If you want to trade the pharmaceutical sector, you can look here.） If tomorrow pharma strengthens, then among pharma there are multiple second-board tickers—there’s strategic value in the bet. First, you need to judge whether the entire pharma sector: Meinonghua (MiannuoHua), it’s highly likely it still won’t necessarily hit a board break tomorrow; it could continue to accelerate. If it directly breaks the board, then the stock that gets up to a board in the “second to third” (二进三) lineup is very likely to become the highest-flag ticker in the whole market. Then it will have enough identification. So whether you want to gamble depends on how you judge emotion and the market’s instant state. If you think there’s still a chance to gamble, then most likely you pick from the second-board tickets. I think the gambling value is that after you go to work tomorrow, you’re just right at the third board, and there should still be room for two more boards upward. If Meinonghua breaks its board and it triggers the entire sector’s sentiment to collapse, it could also become a 5% trapped situation. That really tests your understanding of risk-reward.

5. Don’t forget to look at the big market cycle—it’s just in a consolidation state. In that environment, the most certain positioning is still the ice point; ideally a double ice point. Then buy. At the very least that location is safer, and it’s easier to buy.

About Yu Neng Holding: today’s situation where it hit the limit-down is a landmark event—everyone can’t view it independently.
**

**

      On Friday, I also expressed my view: I believed regulation would extend its regulatory issue. Then today, although it didn’t extend regulation and instead issued a risk warning, the nerves of the stock market are very fragile. After “legit” large funds buy in, they’ll most likely receive a warning letter. So who would still go buy? That’s why at the open it directly opened to sell.  

Also, I pointed out two red positions—didn’t I? Actually, for the first red position of Yu Neng Holding, according to the regulatory rules it had already passed its regulatory period. But at that time there was an extension of regulation, and that trade was a loss for me. So on last Friday, when I watched Yu Neng Holding hit the daily limit-up, I also didn’t go in. The worry I had was exactly the situation today. Big brother, you can’t play by the rules—can you understand?

       How does it become a landmark event? It means: from now on, when doing連板-type stocks, the height limit and the rules for abnormal moves will be stricter. And don’t fantasize about regulators’ attitude—otherwise losing money becomes very likely. Because today’s limit-down gave many short-term prop traders a very clear warning. Look at last Friday: before the limit-up, weren’t there two big bearish candles? Just like I said before—the two bearish candles were to show an attitude to the upside, and also to make room to hit the limit-up. Well, what happened?  

So when you trade a stock up to a certain height, don’t hold any illusions about it. As long as it triggers the abnormal-move rules, all stocks must be very careful about regulatory risk. Otherwise you won’t be able to get out of the trap. Just look at today.

** What I want to discuss at the end, or if the board action is unclear to you, leave a comment. I’ll find time to explain and answer your questions. But today the response time might be a little later—after about 10:00 PM tonight, roughly before 11:30.**

Tomorrow I’ll probably write an article about how to do a rotational market—how for a typical retail trader it’s relatively safe and easy to make money. Actually that strategy I’ve mentioned repeatedly: you get knocked down, stand up straight and correct it—so simple. I just didn’t write some details clearly enough, so you may not fully grasp the core of it.