Three American dads can't compare to one drop in the big A

Today the market continued to plummet, and it was a volume-driven decline. So, is this market a crazy bull, a water buffalo, a sick bull, or a bear market? March has been extremely brutal. After a whole year of hard work in 2025, this month has wiped out all gains overnight, returning to the pre-liberation level in many stocks. From March 2 to March 20, a total of 19 trading days, 15 days saw more than 4,000 stocks falling, with only one day (March 10) where only 850 stocks declined. On March 5, 6, and 18, the number of declining stocks was between 1,100 and 1,200. That means only four trading days had more advancing stocks than declining stocks. Isn’t that tragic? Under such a structural market, the vast majority of investors are losing money or even suffering big losses.

In the past seven trading days, except for March 18 which was a consolidation during the decline, all days were marked by sharp drops! The speed of decline is accelerating—4,000 points is like a piece of window paper, and we thought there was a 4,000-point defense battle, but there was nothing. Once during the 3,000-point defense, his father sacrificed heroically; today, during the 4,000-point defense, his father sacrifices again. Truly a tiger father, no dog son! [Taogu Ba]

Market overview on Friday:
On March 20, the total trading volume across the two markets was 23.028 trillion yuan, an increase of 1.755 trillion yuan from March 19. Don’t underestimate this 1.755 trillion yuan; the result was that on March 19, 6 stocks hit the limit down, and on March 20, 16 stocks hit the limit down—an increase of 10 stocks. The number of stocks hitting the limit up remained the same at 28. Although there were no hundreds of stocks hitting the limit down, dozens did. Both the main posts on March 17 and March 18 mentioned that trading volume had been shrinking, indicating a lack of support for the decline. The small rebound on March 19 was a consolidation during the decline; the market still needs a volume-driven sharp drop to be considered a positive sign.

On March 20, the best-performing sector was photovoltaic equipment. Why? It’s related to our big A’s long-standing patterns. In China’s stock market, there are always three “fathers”: the first is “Understanding Dad,” whose main role is to create global chaos, leading to opportunities in precious metals, small metals, and energy sectors like oil services and chemicals. The second is NVIDIA’s “Yellow Second Dad,” who drives the hardware replacement and price increase logic during the tech bull market, pushing related stocks higher. For example, on March 18, the announcement to enter the AI server trillion-dollar market led to a surge in the computing power leasing sector. The third is “Ma San Dad,” who on March 20 morning news said he would purchase photovoltaic equipment in China, making the PV sector a “red spot” among green.

In terms of previous mainstream sectors:

1. The chemical sector has become a major casualty in the decline, a sign of accelerating divergence. After the stories of the West Strait Coast and commercial aerospace in February, the market introduced a new story of rising prices, which lasted over a month but is now exhausted. Finally, the small concubine’s three-bedroom house fell on the Qing slate in the alley, with Golden Bull nearly hitting the limit down, Jindeng hitting the limit down, and Hongbao hitting the limit down. For other smaller stocks, it’s clearly a day of clearing out. The only survivor was Shaanxi Black Cat, but it failed to hit the limit. Whether funds will flow back depends on whether divergence exhaustion appears on Monday or Tuesday next week, and whether this sector can break out and lead a capital return.

2. The “Yellow Dad” created the computing power leasing sector, which saw uniform declines on March 18 and 19, but diverged on March 20, leaving no survivors—tragic! Next Monday could be the start of divergence acceleration, and we’ll see if any stocks emerge.

3. The Power 2.0 sector is currently led by China Huadian and Liaoning Energy, which performed best among the “investment beyond Shanhaiguan” stocks, leading the entire power sector’s strength. Huadian LiaoNeng withstood the big divergence during the sector’s split, successfully advancing four times and five levels. Meanwhile, the photovoltaic equipment sector, driven by “Ma Dad,” outperformed the smart grid, showing much stronger strength. Next week, we need to see if it can hold for three days and withstand divergence. Only after surviving divergence can there be real opportunities; otherwise, it’s just another computing power leasing story. Just like last time when “Ma Dad” talked about PV too quickly, it was just a story that ended in a crash for many. From a short-term trading perspective, Monday might offer a quick in-and-out opportunity.

The two sectors above, combined into “computing power and electricity,” have been speculated on for a long time, and many people are probably tired of it. For example, the front-end data centers like Mingpu Guangci and Ruisidakang have been heavily hit.

Current market signals for the future:
So far, in this window, after the continuous decline, we need to pay attention to whether an effective rebound occurs after volume-driven declines, especially in the first half of next week. If the market rebounds but is not mainstream, not a mainline, and not with high recognition, then we should decide whether to hold or leave based on specific conditions.

The market doesn’t reveal its bottom; we shouldn’t guess where the bottom is. No matter how much we guess, we won’t get it right. We can only determine the market’s rhythm through the battle between bulls and bears and some policy signals.

When can we confirm the market bottom?
From March 16 to March 20, two signals appeared:
First, continuous sharp declines breaking key levels. Last week, the market broke the 60-day moving average on March 17 and quickly broke the half-year line on March 20.
Second, volume-driven declines appeared on March 20. Large volume declines are a brutal process because investors tend to resist at first, then panic when the decline accelerates, ultimately surrendering their bloodied chips.

Next week, we’ll watch for:
Third, a volume-driven large bullish candle. When investors surrender their chips, institutional funds start to enter gradually, leading to intense battles between bulls and bears. When a large volume bullish candle appears, it signals that the market’s bottom is near.
Fourth, a policy bottom. On March 20, news emerged about measures to protect the stock, forex, and futures markets—definite policy signals.

Of course, the appearance of a large bullish volume candle and policy signals doesn’t necessarily mean a V-shaped reversal, especially now that the market has over 5,000 stocks and a trillion-dollar market cap. It’s different from the past when only 1,000-2,000 stocks existed, and policy announcements often led to V-shaped rebounds. Now, that’s much harder.

As for next week, whether a new “father” can emerge to tell a new story and create a new logic to drive a new wave of market trends remains to be seen. When new trends appear, everyone should focus on “new” rather than “old,” avoiding old bottles of old wine (like the failed commercial aerospace story that was cleared but then hyped again, only to end in a disaster).