Journey to Enlightenment with You - Year of the Horse Part 5: Collapse but Stick Together

Good evening, everyone. [Taogu Ba]

First, thank you all for watching Sister Yao’s market review. Yesterday, Sister Yao predicted the worst-case scenario, and today it played out exactly as expected. But this wasn’t very surprising; after all, without any signals of a rally, the market has to fall—an unchanging rule. We’ll look at the subtle clues in the charts later.

1. Market Overview

Yesterday, the market formed another lower shadow, with the saying “Four not over three,” repeatedly testing that zone. This indicates that the market can’t go higher and must show some stance. So Sister Yao said yesterday that we can’t keep testing; if we do, it won’t recover.

The market opened slightly higher this morning, then started to rise, reaching about 0.6%. But the rally was weak, driven mainly by banks and insurance stocks, which failed to inspire follow-through buying. It was just a self-entertaining show. During the rally, volume was minimal, and it was a quick spike followed by a pullback. When the market didn’t follow through, it triggered profit-taking.

In terms of pattern, today formed a bullish candlestick with no signs of a bottoming out. Today is a turning point, with the only hope being tomorrow’s volume-driven bullish engulfing pattern that could break the downtrend, but the probability is low. Therefore, Sister Yao expects continued decline. Support is around 4,000 points, with a gap that’s not far away—just over one point—waiting to be filled. If the market is going to dip, it’s better to do so forcefully and quickly. Slow, downward declines are the most painful, trapping investors in a negative feedback loop.

2. Short-term Sentiment

The streak of daily limit-ups today feels like a holiday, with all stocks advancing. However, there’s a risk-averse tone. The market isn’t rallying on collective buying, especially for stocks without market standing, like those with three limit-ups, whose fate is uncertain tomorrow.

From the opening auction, market sentiment was lukewarm. The two stocks with three limit-ups yesterday didn’t open high, but after opening, they showed strength in intraday trading, and the buying opportunities for low entries vanished quickly—almost reaching the daily limit-up zone. Meanwhile, the stocks that had huge negative feedback yesterday didn’t show much negative reaction today; in fact, they opened reasonably well.

On the other hand, the broader market was weak, triggering a risk-averse mechanism. As a result, the few stocks with multiple limit-ups yesterday all extended their gains. But today’s gains don’t mean much; tomorrow is the real test. The market has been under pressure at five limit-ups, and a breakthrough is needed.

Also, avoiding weakness is key. If stocks like Sanhexiang (三房巷) can open sharply higher or with a straight-up opening, it could spark a new wave of limit-up streaks. Other patterns will add randomness; even if some stocks manage to advance, their strength remains uncertain, adding unpredictability for the future.

In terms of group holdings, today was slightly better. At least yesterday’s popular stocks like Shun Na (顺钠) were again supported by funds in the afternoon, which is positive. However, current holdings are not deep enough; two limit-ups forming a “Lei Feng” structure need further consolidation before they can go far.

As for the elastic sectors, only Zhongfu Shenyan (中复神鹰) shows strength; others are too unpredictable. Yesterday’s big bullish candle led to a quick sell-off, increasing trading difficulty in this sector. We can only wait.

Overall, sentiment has some participation value, provided the recognition level is high enough.

Core Sentiment Recognition:

Stay tuned for pre-market updates.

3. Sector Overview

The sector theme is collapsing. Last night, two pieces of news emerged: one about GPU giant Huang (显卡黄老板) discussing a trillion-dollar market, which caused some market reaction, and the most aggressive was Shenghong Technology (胜宏科技). These are all billion-dollar giants with high stock prices—hundreds of yuan per share—which are generally not favored in A-shares. Institutions tend to dislike such stocks, often wishing to see them fall further. After opening high, they didn’t sustain gains.

In the short term, retail investors are unlikely to chase these stocks. But these large-cap stocks can severely impact small caps; yesterday’s strong-performing PCB and chip stocks were heavily dragged down by this.

Currently, the only sector with some activity and heat is the chemical industry. However, some strong stocks like Jinniu Chemical (金牛化工) and Chitianhua (赤天化) are also popular group stocks. The sector’s stocks are being rotated, with some hitting daily limits, while others remain in the mud.

4. Trading Strategy

Still mainly cautious. The more you trade, the more likely you are to encounter negative feedback. Currently, only sentiment-driven stocks are worth watching, but when they become the sole target, it can trigger chasing behavior, which then leads to profit-taking.

My advice is to either stay on the sidelines or look for opportunities when the market underperforms expectations, or participate only with extreme strength signals.

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