3.12 Review: Everything Centers Around Energy

The combined trading volume of the two markets reached 2.44 trillion yuan, a decrease of over 60 billion yuan. The market is still largely influenced by external factors. The three major indices opened flat today and dropped sharply, then rebounded slightly in the afternoon. Moving forward, the market is expected to remain volatile. [Taogu Ba]

Oil: Last night, Iran took a hawkish stance, causing Brent crude oil to surge. Several oil stocks in the A-share market opened higher following the trend, but investors remained cautious in this sector. Despite positive news, early gains did not push stocks to the limit-up, and after opening high, they were partially sold off. The stocks then rebounded again, but later declined towards the close. Essentially, the market is still heavily influenced by news; big gains are often sold off, while dips attract buyers. Futures continued to rise significantly tonight, and the expected trend for tomorrow will likely be similar to today.

Chemicals: Oil prices are heavily affected by futures, but chemicals are different. Some chemical resources impacted by the Strait of Hormuz transportation are genuinely increasing in price. Baichuan hit the limit-up, Jinniu Chemical advanced to the second board, and major players like Baofeng Energy are trending upward. However, the sharp decline in oil stocks at the close caused Baichuan to also sell off. After a rapid acceleration, it’s hard to continue the rally tomorrow. These stocks look good, and tomorrow may open slightly lower, creating some divergence, which could provide better entry points later. This isn’t a bad thing.

General Energy Sector: Rotations occurred across related stocks, such as coal, energy storage from a few days ago, and wind power today. The sector was stimulated by news of the UK canceling import tariffs, leading to a large rally in wind power stocks in the afternoon. Currently, all trending stocks are related to electricity, with several billion-market-cap stocks leading the trend. Tonight, the entire market is comparing electricity to previous commercial aerospace. Under today’s strong market momentum, smart money is likely to take profits tomorrow. Whether they can pull back afterward remains to be seen.

Technology Sector: Yesterday, Changfei Optical Fiber A opened high and hit the limit-up, but H-shares surged then fell back sharply. After a quick rise in Guangxun Technology in the morning, Changfei and Huagong surged significantly. Changfei’s H-shares then plunged again, compounded by the strong recovery of oil stocks. Technology stocks were sold off aggressively. Huagong, with a market cap of over 100 billion, traded like a small stock, hitting record volume today. Under the pressure of the index tomorrow, a continuation of divergence and a lower open are expected. Later in the day, funds also heavily bought Tianfu Communication. With continued divergence, it might be another opportunity for bottom-fishing and T+0 trading.

Overall, in the current market environment, it’s essential to adopt a quantitative mindset: sell into strength, be willing to buy dips amid divergence, and recognize that sector rotations are key. The pendulum effect is especially evident. Focus on core sectors for high sell and low buy, and those unfamiliar with trading might consider staying on the sidelines.

The above opinions are personal notes for reference only and do not constitute any investment advice.

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$Energy Wind Power (SH601016)$ $Huagong Technology (SZ000988)$ $Tongyuan Petroleum (SZ300164)$**