Journey to Enlightenment with You Part 0069: Broad Rebound, Who Will Run Faster Tomorrow?

Good evening, everyone. First of all, thank you all for your recent support through tips, encouragement, points, likes, and comments. The market is unpredictable, and with a lack of attention, it can quickly polarize. Wishing everyone gains before the New Year. Thanks for your support. [Taogu Bar]

Back to the market overview

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1. Market Overview

Yesterday, combined with last Friday, the market formed a huge downward candle with high volume, wiping out over 100 points in two days. Such a deep correction makes a rebound highly probable. Well, since everyone hopes for a rebound, some people took action early, rushing into the bidding at a high price, opening more than 0.7 points higher. Isn’t that a sign of a crash? So, after the open, there was no surge; instead, the market continued to sell off, turning green at one point. In the afternoon, the rally began to sound the horn of counterattack. This is what Sister Yao calls “avoid chasing the rally,” and it proved to be true.

There are two reasons: yesterday’s sharp sell-off at the close without widespread buying created a lower shadow, meaning no bottom was formed yesterday. Therefore, a high open today is reasonable, but those who bought early are overestimating expectations. A high open followed by a decline is also the same; if you bought in, then those who tried to buy early in this environment might as well sell first. When the decline reaches around the critical 4000 points, with support and multiple days of adjustment, the market then formed a large positive candle in the afternoon.

During the day, the market was generally a rebound state, with nearly 5,000 stocks in the red, but the sectors were mostly green, and there was no pressure on the large caps. The index closed near its high of the day. Regarding the market outlook, it is approaching the five-day moving average resistance, but the 4000-point support below held up well today. If tomorrow opens high with a pulse, there might be significant profit-taking afterward. If early bidding causes a rush and panic selling, that could be an opportunity.

So, overall, be cautious about chasing pulses; it’s better to accept divergences and wait for opportunities. Especially since today’s correction has been repaired, chasing the pulse now isn’t cost-effective.

Market volume remains healthy, above 2.5 trillion, which is substantial. Falling below this level could signal liquidity drying up. Yesterday, over 120 stocks hit the limit down, and today most have been lifted. If the number of limit-down stocks accelerates into single digits, it indicates a higher tolerance for errors.

2. Market Sentiment

Looking at the bidding, today’s recovery was quite obvious. The most notable was yesterday’s bottoming out in the precious metals sector, where many stocks had significant bidding volume. Zhongjin Gold, for example, traded over 1.2 billion during bidding. The fact that funds are willing to release some of their holdings here suggests a less panic-driven state.

Regarding the recent high-level streaks, the market’s enthusiasm has been limited. Yesterday, only three consecutive limit-ups, with bidding mostly opening flat or with a single price. Wanfeng Shares led the way, then Tian Tian, which is a sign of playful traders not wanting to give up the top spot, eager to continue betting. All the space-related stocks have advanced, signaling further competition. However, the market’s overall height is limited, and it’s uncertain how far these can go. The latest six-limit-up stocks will likely show divergence, especially since the previously triggered abnormal movement in Silver & Nonferrous Metals is still at the bottom, unmoved all day. The recovery has little relation to them, which is a negative feedback.

Although it doesn’t impact the market much, its destructive power is real. On the other hand, the previous space stock, Hunan Gold, rebounded strongly, providing some positive feedback. Before any abnormal movement, funds are unlikely to abandon these streak stocks. The market can only go so high, and we need to watch how it develops.

Tomorrow’s key is whether the overall short sellers can release their positions. For stocks with streaks, whether one or two large orders can appear as single bids. If so, it might be relatively friendly in the short term. Conversely, if they all hit limit down or Silver & Nonferrous Metals continues to fall, caution is advised.

The core market will wait for pre-market analysis and sharing. Stay tuned in the comments to avoid losing track. It’s best to set Sister Yao as a special follow so you can receive updates promptly. The pre-market review is mainly for market analysis and observing trends, not investment advice.

3. Sector Themes

Today’s market was broadly rebounding, with various themes showing strength. The most aggressive was AI, because during the recent sharp decline, this sector held up relatively well and was more resistant to falling. Zhejiang Wenzhou Interconnect, BlueFocus, Liu Jin Technology, and others all participated in the buying spree, opening 5-8% higher. With such a strong start, how can others compete? The only option is to cash out. Expecting high opens to attract buyers is unrealistic in the current market.

The trend isn’t too bad; sectors are rotating. Focus on Zhejiang Wenzhou Interconnect ($600986$).

After the open, more sectors joined in, such as photovoltaics, commercial aerospace, and others. Photovoltaics and aerospace often surged together. In the afternoon, stocks like Zhongchao Holdings and Zhongchuang Holdings helped boost the sector, with Photovoltaics becoming the day’s star. The Vanguard and Xingtao Technology, Shenjian Shares, and others also contributed to the rally, showing good early momentum in aerospace stocks.

The midday high is a traditional peak for the day. After the afternoon open, these stocks surged again, except for the front-runners, which continued to rise. Since the market’s main theme today was recovery, many stocks rebounded during the afternoon. However, the sector’s strength isn’t sustained, and caution is needed when chasing these gains.

Other themes like gold saw limit-down bids across the board, but many stocks opened with high volume and rebounded in the afternoon. Tomorrow, only Hunan Silver and Silver & Nonferrous Metals are likely to open, but since they’ve already recovered today, it’s not advisable to chase if you missed the move.

Other stocks like chemical companies, such as Hongbaili, have some sector influence, but large-cap stocks are needed to drive the sector. Only core stocks can support this.

Overall, although today was broadly rebounding, the lack of focus on themes remains unchanged. Funds mainly targeted aerospace, with short-term traders jumping in. Many participated in the strongest sectors, but caution is advised. Follow the rotation and participate cautiously in bidding for stocks.

4. Trading Strategy Reference

Today’s broad rebound means most traders probably hold some stocks. If you are a core holder and the open is average, you can hold your position. If the market fails to rise strongly or shows divergence, it’s better to take profits. No need to focus on the big picture now.

In terms of follow-up, watch for divergence during the early session. If no one is rushing to buy, observe for support and prepare for potential afternoon or post-divergence surges.

Regarding sentiment, participation in the rally is limited; it’s better to watch and wait.

That’s all… just some personal suggestions for everyone’s reference.