Short-term rhythm is king, top-tier understanding keeps you from taking detours, this week's experience and next week's opportunities shared!

This week’s overall market difficulty was quite high, testing the rhythm. Early in the week, the oil sector opened sharply higher and then was immediately suppressed the next day, which probably caught many people off guard. The lobster stocks gradually weakened after two days, while the power sector remained relatively resilient and showed some sustained strength. The rhythm this week was manageable, so I’d like to share some trading experiences, mainly focusing on the game logic between China Energy Construction and GCL New Energy Science & Technology. [Taogu Bar]

I personally don’t follow the oil sector at all, so if it makes money without me, it definitely won’t trap me!

At the beginning of the week, the leading sub-sector was smart grid, with the sentiment stocks being Shun Na Co., Ltd., and the central army was China Western Electric. Considering that Yunnan Energy Holding experienced a severe abnormal move and then moved very erratically, I predicted that Shun Na’s upward potential would be limited, and there wouldn’t be a break or divergence on Tuesday or Wednesday.
So at this point, you can either switch to other sectors or do a follow-up rally within the same sector.
On Monday, I focused on China Energy Construction as a follow-up rally, which would have less impact from divergence at high levels on Tuesday.
Why not consider China Western Electric on Tuesday? Because Shun Na was the leader at the same time, and if Shun Na didn’t perform well, the impact on the sector would be even greater.
Of course, follow-up rally understanding varies. If Shun Na’s short-term deviation value from initiation is about 60%, and China Energy Construction only rose 15% on Monday, then compared to the entire sector, like China Western Electric which doubled or more, the space is much larger. This understanding is quite important; otherwise, it’s easy to sell prematurely.

GCL New Energy Science & Technology also belongs to capacity trend plays, with short-term strategies focusing on exceeding expectations.
From the sector perspective at that time, Han Cable was the first to hit the limit, and Shun Na didn’t hit the limit either, indicating a certain tolerance for errors. Buying on dips at this point wouldn’t lose much money!
On Tuesday, lobster stocks still had some heat, but GCL New Energy Science & Technology hadn’t gained momentum yet, and even on Wednesday, it lacked recognition. Wednesday was when China Energy Construction led the charge, followed by GCL New Energy Science & Technology. The subsequent sharp decline was normal. The truly unexpected move was on Thursday.
The day before, China Energy Construction hit the limit-up and opened 2.03% higher on Thursday, while GCL New Energy Science & Technology, which was hammered, surged with a high open of 2.99%, clearly exceeding expectations. As someone using a bidding mode, I was very happy to see this kind of bidding. If you watch the opening for more than a minute, it shows a lack of confidence in the bidding mode. So, Thursday’s bidding was an excellent focus point, and there’s no need to chase high or buy on the limit-up.

Let’s also briefly discuss the game logic of lobster stocks.
My trading system prefers to buy new themes on the same day, whether it’s the early-year theme like Jimo or the previous LED optical communication. I usually buy on the same day.
Last Thursday, I paid attention to Ruifeng Optoelectronics, but it didn’t have any premium the next day, so I didn’t participate in the lobster stocks that day. However, there were many news reports about this sector in the evening, with many regions supporting policies, so I thought there might be repeated fluctuations later.
Therefore, on Tuesday, I watched for divergence and decline, focusing on this sector, which also gave a good rebound in the afternoon.
On Wednesday, the sector saw a slight correction but didn’t retreat significantly. That evening, I saw the national platform offering free computing power support for lobster stocks, thinking that a bonus might be coming the next day. But it turned out to be a false alarm; Huasheng Tiancheng had little premium, and the positive news didn’t show much, so I decided to unfollow. It turned out to be lucky, as I avoided the big drop on Friday.

That’s the key experience sharing for this week. These two strategies are also capacity trend plays, just with slightly different short-term game logic: one is the follow-up rally logic of China Energy Construction, and the other is the super-expectation of GCL New Energy Science & Technology. The market was quite tough this week, but overall, it was manageable.

Now, about next week: currently, external conflicts are uncertain, large funds are cautious, and the global market is oscillating weakly.
There’s been little discussion about stocks this weekend, which also indicates a poor market. I won’t go into news details; let’s first look at the big picture.

1. Market opportunities come from declines. When it falls, it’s an opportunity; when it rises too much, it’s risky.
   This view remains unchanged. In the internet and quant era, even minor news can be widely circulated by financial media, easily affecting sentiment. Short-term traders are sharp, and stocks that gap up on good news often trap investors—these are mainly driven by intra-market funds.
   Conversely, it’s better to look for stocks without positive news, or even hope for market declines. Looking back at the past year, after two consecutive days of sharp declines, the market often recovers. Low-entry points during ongoing divergence have a high risk-reward ratio. Be willing to buy on dips actively; waiting for a rebound to chase might be too late.

2. Short-term performance remains heavily influenced by abnormal moves/regulations.
   After the New Year, Yunnan Energy Holding triggered a severe abnormal move, moving erratically daily, leading to high internal competition.
   On Friday noon, I even issued a warning about two risks in the power sector: one was Green Power Generation and Shun Na, which faced pressure on Monday; the other was Yunnan Energy Holding. The warning was validated in the afternoon!
   Traders tend to think optimistically, believing their stocks will break out. Why is it that among over 5,000 stocks, only yours breaks out? That’s the probability of lottery.
   Short-term breakouts are rare; probably only three times a year.

3. Watch out for trend moves involving break-limit rebounds!
   Expectations for short-term high-performance should be lowered. This applies not only to small-cap stocks with continuous limit-ups but also to large-cap stocks.
   The popular short-term pattern involves rebound moves after hitting the limit, similar to Jinniu Chemical. The key is to avoid a 100% limit-up within 10 trading days, but don’t be too obvious either, as some stocks successfully halt trading due to abnormal moves. The core strategy remains low buying during divergence.

Briefly about sectors: this week, lobster stocks and optical communication stocks experienced continuous corrections. Power stocks also couldn’t hold on by Friday, with Shun Na, Han Cable, and Yunnan Energy Holding near limit-down, while China Energy Construction, Power Construction, and GCL remained relatively resilient. The divergence is quite serious.
Shun Na’s short-term gains of 60% have plateaued, and the subsequent high will be affected.
From a sector perspective, the power and new energy sector still has expectations, but just holding for a day isn’t enough; there might be a pullback. If it stabilizes, there’s still hope; otherwise, it could be another rotation.

Next week, on the 16th, NVIDIA’s GTC conference will be held. If there are new technologies or other significant developments, funds might flow into those areas. Recently, I’ve been reviewing M10 materials!
The most promising area is PCB, which is also why companies like Shudi and Dongshan Precision are still relatively strong!
Optical communication might also have opportunities. Once the market rebounds, these sectors will perform.

There’s not much else to write about the market. I plan to stick to one post per week, sharing methods and techniques.
Currently, I’m cautious about positive news; a high open often leads to a decline, and I’m not afraid of market drops. Divergence continues to create expectations gaps.
Next week, I’ll consider some new opportunities. Hope to achieve even better results. Keep going!
$China Power Construction (sh601669)$ $GCL New Energy Science & Technology (sz002015)$ $China Energy Construction (sh601868)$