March 5, 2026 Review and Reflection

1. Today’s Market Summary [Taogu Ba]
   The major index opened high and moved higher in the morning, then retreated in the afternoon, with a small rally at the close. Ultimately, the Shanghai Composite Index closed up 0.64%.
   Total trading volume across both markets: 2.41 trillion yuan, an increase of 24.6 billion yuan from yesterday.
   Number of stocks closing in the red: 4,079; in the green: 1,306.
   Limit-up stocks: 79; limit-down stocks: 7.

Today can be seen as a continuation of the recovery after a market panic-driven decline (a typical rebound). Fellow traders should feel that the market sentiment today was very positive. Most of the stocks in the watchlist and favorites were in the red, and the number of stocks closing in the green rarely dropped below 4,000 (the lowest was around 3,800 during the afternoon pullback, but later the market rebounded and the number of stocks in the green rose back above 4,000).
However, the market did not perform as well as the mood suggested, hiding many hidden risks:

1. Insufficient volume
   Although today saw increased trading volume, most of it came in the afternoon. In the morning, the microLED sector opened high and moved higher, with the index also pushing upward. During that time, trading volume was relatively low—around 800+ billion yuan—while the market was rising on low volume. In the afternoon, volume increased as the index retreated. This indicates that the buying power is not strong; rather, short-selling followed the decline.
   This situation could lead to a scenario where the market is externally strong but internally weak, lacking volume support. Even with good sentiment, it’s mostly superficial. The afternoon pullback was therefore inevitable.
   In terms of sectors, today’s index and sentiment resonated, but volume was insufficient. If the microLED sector had seen real volume, it could have become the next major theme. Unfortunately, despite the sector’s explosive rise—over 20 stocks hitting daily limit-ups—funds did not follow through across the market, indicating that investors did not fully endorse this direction (even though it had a strong intra-day rally).
   The main theme has not arrived yet!

2. Insufficient number of limit-up stocks
   Today’s market sentiment was very high. The market opened with over 5,000 stocks in the red, and throughout the day, the number of stocks in the green rarely fell below 4,000. Despite such enthusiasm, there were not even 80 stocks hitting the daily limit-up, let alone hundreds.
   Looking back, this is likely due to insufficient volume. Many stocks surged then pulled back or were sold off from the board, again confirming that market sentiment was not as strong as it appeared.

Thus, tomorrow’s market is likely to be volatile and divergent. Combining this with the recent pattern—on 3/3 panic sell-off, on 3/4 weak recovery failing to cover the 3/3 decline, and on 3/5 opening high then retreating—the index may remain in a range for a while.
However, the small rally from 2:30 pm gives some hope for tomorrow, suggesting a potential for a structural move. Today’s sector movements at the close may also signal some action tomorrow.

2. Sector Analysis

3. MicroLED
   This sector was fueled by news from last night. The logic is that microLED CPO solutions have very low transmission energy consumption, significantly reducing the energy use of traditional copper cable solutions. This is a solution Nvidia has been seeking for energy efficiency. (However, I didn’t see this news last night, nor was it mentioned in the pre-market articles by major analysts I follow.)
   In the morning, the microLED sector opened high and moved higher, with key stocks quickly hitting the board: Huacan Optoelectronics, Woge Optoelectronics, Sanan Optoelectronics, Guoxing Optoelectronics, Zhaochi Co. It was another sector driven by quantitative factors, with over 20 stocks hitting daily limit-ups and several with long upper shadows, showing strong sector strength.
   However, in terms of sustainability, despite this explosive sector performance, it did not lead the market with high volume or become a main theme. Still, its strength was much greater than previous secondary themes like space photovoltaics or AI animation, so its potential remains promising. Tomorrow, it’s likely to continue to have some gains.

4. Price increase themes
   Today’s price increase themes generally retreated. Phosphates, fertilizers, and non-ferrous metals were among the sectors with the largest declines.
   Among the price increase themes, one small sector stood out: cultivated diamonds. Huanghe Xuanfeng, a representative stock, even hit the daily limit at one point. Although it later pulled back, it was particularly eye-catching amid the overall decline of other price increase themes.
   As mentioned in previous articles, price increase themes are long-term, sustainable sectors. As long as demand persists and supply-demand relationships don’t change completely, the logic remains valid. Focus on core stocks around the 5-day moving average, and consider low-position trend trades on alternate days.

5. War-related themes
   After the digestion and easing on 3/4, war-related themes finally started to diverge. Today, oil, gas, shipping, and gold stocks were among the top decliners.
   In the afternoon, news came that Iran’s defense forces said they had not blockaded the Strait of Hormuz, but the Islamic Revolutionary Guard Corps restricted US, Israeli, and European ships from passing. The conflicting statements from Iran suggest continued uncertainty. It’s best to stay on the sidelines for now, as I don’t plan to trade this theme due to its high volatility.

6. Reflection on Today’s Trading
   This morning, seeing the strength of the microLED sector, I thought it might become a main theme. It surged to over 9 points, and both sentiment and index showed signs of resonance. But then I checked volume—market volume was shrinking, so it couldn’t become a main theme without volume support.
   Despite hesitation, I still entered the sector. Even if it doesn’t become a main theme, today’s strength marked the first day of its rise. Tomorrow, it’s likely to open high, so I expect some gains. I plan to gradually shift into core stocks tomorrow.
   My current holdings are Nanjing Power and Huanxu Electronics, so I sold both:

• Nanjing Power at a 2.74% profit, then it rose to about 9%, but later pulled back. Its movement confirmed my previous judgment, but I was in a hurry to buy in, so I sold.
• Huanxu Electronics at 3.16% and 4.16%, but after selling, it plunged and fell below -1.38%.
  Once I understand the logic behind microLED, the only fundamentally sound stocks in the sector are Mulinshen and Shentianma. Mulinshen’s gains were slightly higher, and its volume was larger than Shentianma’s, indicating stronger investor recognition. I chose to buy Mulinshen. It had already gained about 8 points and could be bought out with a large order for a limit-up. I went all-in.
  Mulinshen also attempted to hit the limit-up again but was sold down, and I noticed a 160 million yuan order at the limit-up price—what does that mean? Sure enough, after failing to hit the limit-up, Mulinshen started to decline, closing the day with a 5%+ drop, resulting in a loss of about three points for me. Tomorrow’s auction strength and opening support will be key.
  The expectation for tomorrow is no limit-up, with a high-to-low move. I plan to sell during the initial surge to free up capital for core stocks (if they open with a one-word board, that’s unavoidable).

The current market is likely to be volatile and choppy. In this uncertain environment, low buy and high sell strategies are advisable unless a sector shows strong momentum on its first day of breakout.
Additionally, pay close attention to volume changes: when volume increases during index rises and shrinks during declines, it could signal the end of a shakeout and the start of a breakout.