3.4 Chaos

Brothers, good evening [Taogu Ba]

The weekly K-line of the Hot Stocks on Tonghuashun shows five consecutive declines, and it’s been tough to trade recently.

This is a critical and challenging point.

It’s critical because the index has dropped sharply, there are divergences in oil and gas, and the previous main line of fiber optics has moved higher. This indicates the need for new developments.

It’s difficult because the old hotspots like fiber optics, oil and gas, and small metals haven’t fully retreated. Longfei remains sideways at its peak, with some rebound and fluctuations below. The sectors haven’t been completely exhausted, funds are hesitant—some are focusing on fiber optics, others are seeking new low-priced themes. No consensus has formed, which is reflected in the market as a lack of focus. Additionally, starting tomorrow, there should be more news, and we can see more stocks moving in straight lines. With more hotspots, rotation may accelerate.

Here’s the plan for tomorrow:

1. The index pulled back somewhat in the afternoon, which isn’t ideal. It might dip further tomorrow to reach a bottom.

The strategy here is to diversify on the left side, wait for the index to recover as expected, sell off the weaker stocks, and shift focus to those showing resilience in the main line, concentrating on core stocks.

Theoretically, this is a good rhythm, but the actual situation will be more complex.

2. Pay attention to two details:

① For intraday main line direction, it’s better to buy on dips than chase rallies. For example, during tech recovery, instead of chasing Changfei or TeFas, consider jumping on Tongding.

After focusing on the intraday main line, it’s better to switch to hot sectors that are adjusting, like oil and gas versus tech yesterday.

② Take the lead at the end of the day by buying stocks that are adjusting with the trend, rather than those already rising. For example, yesterday’s Huasheng Tiancheng and Tuowei Information—Tuowei closed in the red, but today performed worse than Huasheng, which closed deeper yesterday. Also, in the power grid sector, Huayin Electric Power and Beijing Kere are stocks that didn’t fall much yesterday but underperformed today compared to those adjusting with the trend.

3. Oil and gas: Compared to precious metals, oil and gas paths are more like Yaxia Hydropower, a positive pyramid-shaped theme driven by news. The first day sees a breakout, then gradually declines over the next two or three days, leaving only the strongest two or three stocks—Shandong Moly and Intercontinental Oil & Gas. Today, the sector showed a typical inverted N-shaped time distribution, but the rebound was stronger. Tongyuan’s 20cm was close to a breakout. Unlike Yaxia, oil and gas are more influenced by external futures, making it hard to form a tight group like Shandong Moly or Southern Road Machinery, which are more collective.

Many stocks today showed high volatility, a common short-term top signal—be cautious of risks.

4. Relatively new and low-positioned sectors include storage, electricity, and domestic computing power.

① Domestic computing power: The logic is based on the upcoming DeepSeek V4 release and overseas expansion. The position isn’t high, but the path has been bumpy—neither weak nor too strong. It can be used as an event-driven core, with the 5-day moving average as good support.

Core stock: Huasheng Tiancheng.

Strength: Chuanrun Co.

② Electricity: Intraday main line with sector rotation.

High-position core: Hang Electric.

Multi-wave pattern: Hanlan Co.

Strength: Shun Na Co.

Shun Na in a straight line, Hanlan with two consecutive waves—these are promising.

Hardware segments:

① SST: Sifang Co., China Xidian, TBEA, Jinpan Technology.

② High-frequency transformers: Xinte Electric, Jingquan Hua, Igor.

Storage, electricity, and domestic computing power are three sectors worth long-term tracking. The new main line is usually confirmed after the index recovers and diverges again (the blue circle shows the current position). When the time comes, what can withstand the test? Just like Changfei Fiber Optics on February 5-6.

At the bottom left of the article, seven “fuel coupons” are available—let’s work together to collect them all.

Thanks for your support!

This article is for personal review only and does not constitute investment advice. Investing involves risks; please proceed cautiously.

Long-term tracking is worthwhile—confirming the new main line often depends on the index bottoming out and then recovering, followed by another divergence. When that happens, what can hold up? Just like Changfei Fiber Optics on February 5-6.