A simple summary of some recent trend understandings (turned out to be not so simple after writing it)

Here’s a recent update on the trend concepts I’ve been recording and analyzing. This is the opening sentence of my article. Currently, it’s the last sentence I write before posting, and I realize it’s not simple—five thousand words, eight pages. Take your time to read through. [Taogu Ba]
Too much text, so I won’t bother with bolding or formatting—just find the key points yourself~

First, I’ll share a few recent charts to help everyone recall the context.

1. Starting the day before yesterday and yesterday, Changfei and Honghe both began to show signs of stagnation. I’ll keep this a secret for now—Changfei and Honghe are the leading stocks in this round of institutional trend rallies. Why? I’ll explain below. For now, let’s accept this conclusion and analyze further. After Changfei and Honghe started to stagnate and lag behind, conscious investors should notice a key issue: when the leading stocks of this style pause and consolidate, it indicates that funds are gradually withdrawing—no longer willing to chase high prices. This is a high-low cut signal. If the leaders begin to fall further, then there’s no high-low cut; it’s just clearing out and correcting.

2. Fundamentally, the earnings of Changfei and Honghe have already been realized during the first wave of gains. The big drop on the day Changfei’s first red candle appeared and Honghe’s earnings report came out was due to fundamental realization. But after that, their continued rise is driven by style and segmentation—these two stocks are riding on sentiment and recognition premiums. Once this style ends, a corresponding correction or decline will follow, as seen in the sharp retracement of Changfei and Honghe’s recent large red candles.

3. Trend stocks also involve initiative and leadership. Whoever starts first and drives the profit effect will be imitated. Those who proactively generate profit effects also enjoy premiums. Initially, some saw Changfei as part of the Hang Electric faction, but when Changfei ignored Hang Electric’s negative feedback and moved independently, it confirmed that it was the style’s main leader.

4. From a consecutive limit perspective, the initiation and second buy point of Changfei resemble the first and third weak-to-strong transitions—on the day of the big rally candle, Changfei’s large positive move confirmed the shift to strength. Similarly, February 6 was an institutional node. I previously shared a stock selection method based on the 1.5 institutional node, which can also be applied to February 6. So, stocks hitting the limit or surging on February 6 are worth considering as institutional candidates. You should consciously think about selecting stocks on that day. I also posted stock picks based on new highs on February 26 and proactive selection on February 27, reflecting institutional awareness. If you realize that during February 26 and 27 you should focus on institutional stocks, you’re not far from understanding the pattern.

5. These charts reflect that even when the leading style stocks stagnate, there are still traders doing counter-trend trades—reversals and rebounds happen repeatedly. Even in a fish tail market, recognizing stagnation should prompt you to look for high-low cuts to continue eating the “fish belly,” rather than panic-buying deep in the water of long-fly and Honghe.

6. Another foreshadowing is that today is also a phase where the market helps us select stocks. Under the pressure of institutional computing power trends, the initiative and leadership aspects become more evident. I shared many stock pool charts a few days ago and even made an Excel sheet for tracking.

However, there are many stocks and many directions.
But after today’s thorough filtering, it actually helps focus the attention—it’s clear who is swimming naked and who is riding the wave.
A big drop makes you realize the focus. This isn’t a knockout competition; it’s about selecting the best. Similar to choosing breakout momentum stocks, selecting the strong ones, divergence-based, and strong style leaders. Later, you can still profit from macro and Huaxu, but today you can see which main players have more strength or a better pattern—it’s like a stress test to see who is truly skilled and who is just pretending.
Based on gains and amplitude, the top active and long-legged stocks are four: Zhongtian, Hengtong, Dazhu, and Dongcai. Moving forward, the trend of computing power and institutions can revolve around these four, buying low and selling high. Among them, Zhongtian and Hengtong are my subjective picks for high-low cuts of Changfei; Dazhu is a solid core; Dongcai is a high-low cut of Honghe—relatively new, with rising K-line slopes, suitable for early entry.

7. The trend-based stock selection approach is similar to the breakout method, with an extra step of finding profit effects. If you can’t identify the fundamental embedded in the trend, just wait for the leader to start (like relay racing without the first lap). For example, when Changfei and Honghe show profit effects, others will imitate. First, list the directions and stock pools, like the Excel I shared earlier, then gradually refine—filter by fundamentals, stock traits, and focus. Initially, I selected five or six directions with about twenty stocks, tracked them for a few days, and with the recent negative feedback, it became clear who is strong. Focused down to four: Zhongtian, Dongcai, Hengtong, Dazhu. Just trade around these.

The profit effect of Changfei, the pioneer in this round, was first demonstrated by Jinhaitong. Few people noticed that move, but after Jinhaitong, you should realize that someone has established a style. When the style is set, imitation and new variations will follow. If you missed Jinhaitong but noticed Changfei near the end, you should realize that funds won’t easily abandon a hot sector. The style and profit effect will continue. After discovering Changfei, you should be aware that the money from Jinhaitong is likely flowing into Zhongtian, Hengtong, Dazhu, and Dongcai. (It might not be these exact stocks later, but the idea is to follow the pattern.)

I’ll stop here. The rest of the analysis is still being refined, and I haven’t yet formalized a comprehensive methodology like my previous detailed posts. But these key points summarize my current trend model.

Additional notes on recent stock selection strategies:

Last night, I shared three stock charts based on new highs:

The core idea is that stocks hitting new highs, especially institutional favorites, reflect key nodes—like Nvidia’s earnings release, which prompted institutional reassessment. The next day’s layout is crucial—like the 1217, 105, 206 nodes representing index and institutional positioning. February 26 was a strategic node for industry logic. Stocks surging to new highs at these points are driven by institutional actions, filtered by volume and personal judgment.

Today, Nvidia experienced a sharp decline, reflecting market pressure. Many stocks just hit new highs and may hesitate to push further, which is normal. After new highs, the market consolidates, making focus easier. Nvidia’s long-term trend remains upward; the resilience of the A-shares today shows institutional confidence in Nvidia’s fundamentals. Even with a 16% drop in the DS, the shortage of computing power keeps Nvidia climbing.

A quick aside: institutional style differs from most short-term traders—they write research reports, pursue “value investing,” and aim to persuade investors. They are constrained by their frameworks. Retail traders can gamble wildly, but institutions operate within limited scopes. For Nvidia’s industry chain, stable earnings are their path dependency. I mentioned during trading that institutions avoid Huawei for various reasons; their focus remains on Nvidia for the foreseeable future, possibly also on Elon Musk’s ventures.

Final note on buy and sell points for Honghe and Changfei:

Changfei’s buy point was around 1.30, capturing the first wave; the big rally on February 6 was an institutional stage, with the large rally candle as a second buy point—indicating the style and sentiment are rising. February 24 was a selling point—early profit-taking of about 60-70 points. Once Changfei shows consistent strength, the proper move is to sell the core holdings and let profits compound, exiting if the five-day moving average fails to hold or the ten-day fails, then reposition elsewhere, like Dazhu Laser.

Honghe’s pattern is similar: a big leg on February 9, accelerating the trend; February 24 was the best entry point, with profit rolling. Selling on that day, you could find Dongcai afterward.

That’s about it. I haven’t yet formalized a systematic methodology like my previous detailed posts, but I’ll continue refining.

Summary of my current trend approach:

1. Identify the source of profit effects
2. Analyze the underlying logic and main players’ tactics
3. Define the current profit effect with your understanding and language
4. Find imitators of the leader stocks
5. Reason about the expansion of the profit effect
6. Preliminary direction and stock screening
7. Focus on divergence and strength, based on style leadership and market feedback, using high-low cuts
8. During the fish belly phase, select up to five stocks for rolling profits

Below is a rough transcript of a recent conversation I had, simplified for clarity:

First, find the style where the profit effect is embedded—say, in March-April last year, during Zhongyida’s run, the effect was driven by price increases and trend snake moves. Recognize this core style. Then learn Zhongyida’s pattern. After that, find imitators—like Lianhua, Angli Kang, Yong’an Pharmaceutical, and Leshan Electric Power, which all had multiple waves.

Once you identify the core stocks of the big cycle, find their imitators and those that broke out and expanded the profit effect—like Hongbao Li after Zhongyida, then Yong’an, Lianhua, Angli Kang, which developed their own recognition.

Apply this to July-August last year, during the institutional computing power surge, with Chunzho as the pioneer. Its profit effect was imitated by Demingli, which led the storage chip rally. Demingli was essentially copying Chunzho’s tactics, with no new breakthroughs, so its strength declined over time, and the style faded.

In this cycle, the core is Changfei and Honghe—driven by the rising logic of hardware price increases. Jinhaitong first demonstrated this style, but few noticed. After Jinhaitong, you should realize that the funds will shift to the next style, like Changfei, which is likely to continue as the new leader. When you see Changfei, realize that the money from Jinhaitong is flowing into Zhongtian, Hengtong, Dazhu, and Dongcai.

I’ll stop here. The key is to recognize the pattern: first, identify the profit effect source, then find imitators and expanders, and finally, focus on the stocks that embody this style. Keep observing, refining, and adapting.

This is a rough outline of my current trend analysis framework.