2.5 Review: Extreme shrinking volume + freezing point + chaos

The combined trading volume of the two markets reached 2.1 trillion yuan, today shrinking by another 300 billion yuan. The indices pulled back to 4050 and then rebounded. Recently, the biggest bearish sign has been the Hang Seng Index closing in the red, showing some signs of stabilization. If the Hong Kong stocks stop falling, the A-shares market will likely follow with adjustments. There is about a week left before the Spring Festival, and market volume is expected to be difficult to increase, so the main trend will probably be rotation. [Taogu Ba]

In terms of sentiment, since most retail investors and funds have been resting recently, only quant funds and retail traders are active. Retail investors cannot dominate the market; quant funds are the main force. If you review carefully, you’ll notice that the sectors that surged the previous day or saw late-day buying, tend to lead the next day. Sectors with deep divergences the previous day can recover and rise even with a low open the next day. Therefore, if you want to play in this environment, you must have a quantitative mindset: when a sector rises, trust it early; if there are divergences, act quickly and cut losses immediately.

Yesterday’s most disappointing sectors were computing power and AI applications. They saw strong recovery in the early trading hours today. On the application side, there was a one-word opening, with the market opening directly into a straight rebound. Zhejiang Wen also opened at the limit and surged significantly. These are intra-day recoveries to small peaks. Funds are likely to split tomorrow, so late in the day, stocks like ZhiTe and Blue Standard jumped early. Yesterday, computing power and AI applications also showed divergence, with groups like Xunxing rebounding, Wangsu recovering strongly, and Litong opening low and then rallying with a big bullish candle. For tomorrow, the most disappointing photovoltaic sector today also has recovery expectations, as funds are actively taking early positions late in the session.

The commercial aerospace sector is more sensitive to the overall index environment. When the index is strong, the sector can recover together; when the index is weak, only select individual stocks will strengthen actively, while others choose to exit after a rally. Today, several stocks like Julli and Development attempted to lead the recovery in the morning, and Western also tried. When these didn’t work, the afternoon saw a rally in Shenjian, but stocks like Xinwei are genuinely weak. Compared to AI applications and computing power, aerospace remains relatively stable without big swings. There are many positive news daily in this sector, and once the overall sector’s chips turn over enough, there will still be a chance for another rally.

The big consumer sector has benefited recently from funds shifting to safer assets, the stabilization and rebound of Maotai, and the traditional Spring Festival consumption hype. Today, multiple sub-sectors performed strongly, such as food and beverages, liquor, film, and tourism. It remains to be seen whether more funds will participate later.

As for restructuring, these stocks tend to move relatively independently without sector drag. For example, Fenglong, Jamei, Shengtong, Tianpu, and Minbao Optoelectronics are currently in focus. Fenglong moved 20% in three days, and regulatory authorities didn’t intervene at night, so the group may continue to hold. However, by Friday, funds might worry about weekend exits, so caution is advised when chasing high.

Other sectors won’t be analyzed in detail. In a rotation market, either stay in cash and rest or buy on the left side during divergence, take profits when prices rise, and don’t fear selling too early.

The above views are personal notes for reference only and do not contain any investment advice.

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** $Aerospace Development (sz000547)$ $Minbao Optoelectronics (sz301362)$ $Light Media (sz300251)$ **