3.18 Review: Smart Hardware Inflow, Power Heat Declining, Index Breakdown Expectations Unchanged

Computing hardware is fully flowing back today, mainly driving the index to bottom out and rebound in the afternoon. However, in the morning, CPO, memory, and liquid cooling showed some recovery, and only in the afternoon, stimulated by Alibaba Cloud’s price increase, did the overall flow return, also helping the index regain lost ground.

In the early session, core CPO stocks like Tianfu opened 5% higher, recovering most of yesterday’s decline, which boosted the rally of Zhongji and Yiwei, energizing the sector. Rees and Kechuan also leveraged the momentum to catch up. Rees, which has hit the 4th consecutive limit-up in 7 days, was able to reach the limit today, driven by sector enthusiasm and the hot money operating in a rebound style. However, its limit-up strength was not strong enough; to continue rising tomorrow, the sector needs to be strong enough. Expectations should not be too high unless a divergence turns into consensus, which could lead to a higher outlook. Kechuan, with 2 limit-ups in 3 days, had weak limit-up strength, likely a short-term rebound driven by main funds taking advantage of sector recovery, not changing the downward trend.

Memory sector activity was mainly driven by the US stock market. Western Digital surged 9%, Micron rose over 4% to a new high. Domestic memory core companies like Byteway and Deming continued to hit new highs, which on the chart looks like institutional work, based on their performance and performance certainty. Longke, with 2 limit-ups in 3 days, surged 60% in three days. As an old core in storage, it broke through a platform the day before, with no resistance above, and is expected to break through the platform and go higher. It continued to rise today, establishing a market low and becoming the emotional core of storage. As long as sector enthusiasm persists, it may continue to advance. Tongyou and Shenkong also broke through the platform with different strengths—Tongyou is very proactive, while Shenkong is more passive. Short-term traders should choose the stronger stocks. Guoke continues to rise strongly along the trend, and as long as sector enthusiasm remains, it will continue to advance along this direction.

Liquid cooling was mainly stimulated by Google’s team visiting mainland China to inspect liquid cooling equipment, but the sector’s initiative was weak. Core stocks like Yingwei, Gaolan, and Yimi performed poorly. Feiling was passively rising due to market heat, and Jiali and Dayuan also showed weak strength, more like rebounds. The sustainability of this sector is questionable.

At noon, under Alibaba Cloud’s announcement of up to 34% price increases for AI computing power and storage products, capital flowed back into computing hardware. Cloud computing quickly warmed up, followed by strengthening in CPO, PCB, liquid cooling, and gas turbines. The logic is that cloud computing price hikes are related to rapid AI application development, especially with the emergence of products like OpenCL, which greatly stimulate industry growth. This sector has strong potential to become the next main theme and is worth close attention.

As the leader in this sector, cloud computing is most likely to attract capital. In the afternoon, DataPort quickly hit the limit, starting sector enthusiasm. Zhongbei and Yunsai followed with gains, while Pingzhi, Guanghuan, Youke, Qingyun, Shoudu, and Tongniu continued their advances. DataPort was the first to hit the limit, undoubtedly becoming the sector leader. If the sector continues, it is the top choice. Zhongbei and Yunsai are core cloud computing stocks; today’s turnover increase likely indicates data port’s catch-up. Early in the session, Meili and Aorui also rose, probably spontaneous rebounds unrelated to Alibaba Cloud’s price hike. Meanwhile, in the sector, Dongfang and Shunwang also rose significantly but showed little performance in the afternoon, indicating their moves are unrelated to Alibaba Cloud’s price increase.

Regarding computing hardware, the most active recent sector is power. It is the only sector with ongoing momentum, though now the enthusiasm is waning, partly due to the weak environment and capital consolidation. Today, it remained active but with reduced heat. From individual stock performance, the main styles are rebound-driven by high-low switching and focusing on core stocks. In the morning, driven by China Power LiaoNeng, ShaoNeng, and Guangdong Electric’s straight-up moves, capital focused on this direction. China Power LiaoNeng, with 3 limit-ups, is a strong stock and naturally attracts attention; it is the emotional core of the current sector and most related to sustained enthusiasm. Zhongnan, with 6 limit-ups over 8 days, rebounded today, likely a continuation of yesterday’s rebound, but the style has faded significantly, and expectations are low. ShaoNeng and Guangdong Electric, with strong straight-up moves, are sector catch-up stocks, but with low sector enthusiasm, their sustainability is doubtful—probably a one-wave rally with no long-term value. Helong broke through the platform with a limit-up, and its continuation depends on sector heat; most likely, it’s a one-wave rally too. Yabo, with 2 limit-ups, belongs to the photovoltaic energy storage sector, showing strong signs of main force operation. It’s currently in a high-pull stage, not a good time to participate—be cautious of sudden drops. Yesterday’s group of Guosheng, Shunna, Xihua, Zhengtai, and Shuangxin all failed to hold their limits today, indicating this style is being abandoned by the market. Short-term traders should pay attention to this trading rhythm.

Meanwhile, the power sector’s enthusiasm was only in the morning. During the afternoon rebound, its performance was average. The enthusiasm for power also extended to smart grids but was moderate. Stocks like Great Wall, Jicheng, Baili, Xinhong, Taihao, and Hangdian mostly reflect oversold rebounds and are unlikely to sustain, so temporarily, this sector can be set aside.

Yesterday’s popular chemical stocks all declined sharply, with only Sanfang and Chengzhi, which hit the first limit, remaining high. Others all failed to hold their limits, with JinNiu, LuHua, ChiTian falling sharply, and JinNiu and Lutian even hitting the limit down. This reflects a trading pattern where, without sector support, funds focus on the most core stocks, and others are liquidated. Sanfang, with 5 limit-ups, became the highest in the market, with clear recognition, but sector effects are weak, making further gains unlikely. Cengzhi, which hit the limit after days of divergence, showed strong momentum today, with obvious main fund operation. It’s likely a high-low rebound driven by sector enthusiasm, with a high probability of accelerating into a one-wave move, making it hard for external funds to participate. For the chemical sector, there are no further expectations—at most, a rebound. The strategy is to reduce positions on rallies and withdraw gradually.

Besides these hot sectors, a few focus stocks are worth noting:

Shenhua, with 3 limit-ups, is a short-term main force operation result; after acceleration, it’s likely to be a sharp drop, easy to get caught in a trap, so no participation value.

Jiugang, with 4 days and 3 limit-ups, is driven by rumors. Such speculation is prone to sharp drops and should be approached with caution.

Jidan, with 2 limit-ups, is a lone wolf stock driven by main force, with no sector effect, and carries significant risk.

Finally, regarding the overall market, the Shanghai Composite showed signs of breaking down early in the morning, but in the afternoon, it rebounded on the back of the computing hardware rally. However, we should note that the market shrank significantly in volume, and the hardware stocks driving the rebound are all high-level stocks, with no volume during the rebound, indicating weak market momentum. This means the afternoon recovery was limited. Also, current capital is not focused on any particular sector or style, making the market very scattered and risky. Therefore, the key is to prevent a breakdown and further decline, with the most important factor being to control positions.