Rebirth of the Capital Legend

"The A50 Index has actually completed a breakthrough trend on the previous shock platform." Liao Guoxiang responded with a smile, "And in terms of the K-line pattern, it feels that the A50 Index is clearly ahead of the entire market. Other main market sectors, including the 'big infrastructure' main sector, are basically still in the process of breaking through the previous shock platform, or have not yet broken through the previous shock platform.

Judging from the K-line pattern, the A50 index is clearly in the retracement position after breaking through the pattern.

In other words, in fact, among the many indexes in the market.

Regardless of today's market trends, overall, the A50 index is much stronger.

And judging by the situation, this trend is far from over, and it is likely to continue to move upward and continue to lead the trend of other market indices.”

"Brother Liao, that's what you mean. It's equivalent to saying that the institutional group trend of the main weighted sectors such as liquor, white goods, medicine, consumption, electricity, and finance will continue." Li Jinshi said, "According to what you mean, the subsequent market trend, in terms of the overall investment style and direction, will still revolve around large-cap stocks, weighted stocks, and blue-chip performance stocks? Will the market's style of preferring big stocks to small ones be further developed?"

"Yes, that's what I mean." Liao Guoxiang paused, and then said, "It's obvious that small and medium-sized stocks and micro-cap stocks are just oversold rebounds after the chips were broken. Not only are they not sustainable, but there is no basic underlying logic to support the long-term market trend.

And the weighted main line...

Whether it is liquor, white goods, medicine, or electricity, consumption, and financial sectors.

For the relevant core leading stocks, no matter in any recent time period, including today, the entire market has not seen a significant increase in trading volume.

Think about it, the main institutions of all parties were previously in these main sectors.

Those who have been together for more than half a year have generally speculated that the price has doubled.

Can this increase, this increase in market value, and today's volume feedback be regarded as a real loosening of the chips of the main internal funds? Not at all.

Today the main weight line and A50 index were adjusted.

At best, it is just a small amount of funds within it that want to adjust their positions and change stocks to the "big infrastructure" line, or it can be said that the main capital groups that had insufficient positions on the "big infrastructure" main line before and had too heavy positions on these weighted main lines are just slightly reducing their positions and changing stocks.

The essential logic behind the operations of these fund groups is not that they are pessimistic about the future and subsequent market trends of these weighted main lines.

It is simply a matter of evenly distributing positions and spreading risks.

Furthermore, based on the underlying logic and fundamentals, these core leading stocks in the main weight line do not have much valuation bubble at present, or the so-called deterioration in fundamentals.

Not only did this not happen...

In fact, looking into the future, overall, the future expectations for the weighted main-line stocks are still improving.

Also, since this long-term investment trend in the market has been formed and has been generally recognized by a number of major investor groups in the market.

Then, under the influence of trend inertia.

This trend will be quite difficult to change if the underlying logic does not change and if there is no serious valuation bubble.

I can say with certainty that the market trend of the core stocks that institutions are holding together is good.

Not only will the situation not change at this point, but it will most likely get worse.”

"I agree with what Brother Liao said." Chen Guiyun thought for a moment and responded, "The entire main-line sector has such a strong trend. It is impossible for it to end with such a small fluctuation and such a small amount of energy."

"It seems that small and medium-sized stocks and micro-cap stocks have not fallen to the bottom yet, so they should not be touched." Li Jinshi sighed and said, "However, the 'big infrastructure' line has diverted the main capital group that was previously concentrated in the A50 index component stocks. It should have an impact on the main line sectors such as liquor, white appliances, medicine, consumption, electricity, and finance, which were heavily supported by institutions in the early stage, right?"

"It is certain that there will be some impact," Liao Guoxiang said, "but it will not affect the development of each other's trends. In fact, the long funds that are currently mainly supporting the market for the 'big infrastructure' line do not come from the main sectors such as liquor, white appliances, medicine, consumption, electricity, and finance, but from the film and television media, Internet software, electronic information, etc., which are oversold main sectors."

"Yes, I think so too." Chen Guiyun said, "The logic driving the 'big infrastructure' line and the continued market trend are a little different from the previous main sectors such as liquor, white appliances, medicine, consumption, electricity, and finance. Previously, it was the market trend generated by the joint efforts of institutions and the 'national team'. Now, the main line of 'big infrastructure' is more like the result of the joint efforts of the market."

"The main reason is that half a year ago, no one expected that this wave of real estate market boom would be so fierce, and the house price increase would be so sustained." Li Jinshi said, "So no matter whether it is many major institutions or the 'national team', they do not have enough opportunities to take the lead within this line."

"Previously, there was a serious overcapacity in the steel, coal, and real estate industry chains," said Liao Guoxiang. "Who would have thought that in just one year, the 'supply-side structural reform' proposed by the state would really take effect? ​​The industry fundamentals and the operating conditions of the relevant core leading enterprises have undergone earth-shaking changes."

"Yes, the strong cyclical industry is indeed the most attractive and explosive main line sector in the market." Chen Guiyun responded, "Because there was enough pessimism before, and now there is gradual optimism, it has given the "big infrastructure" line enough expectation gap space, and with enough expectation gap space, there is naturally enough room for market development."

"From this perspective... the violent market fluctuations in the early trading today are actually a disguised positive for the subsequent market development of the 'big infrastructure' line?" Li Jinshi reacted and said, "This reduces the selling pressure of early profit-taking, and at the same time, it indirectly raises the average holding cost of the entire 'big infrastructure' main line."

"That's right." Liao Guoxiang said, "It is unlikely to break through the previous shock platform without any volume. Appropriate divergence has only benefits and no disadvantages for this large-scale core main trend. On the contrary, it is the serious and continuous shrinking of volume... that is worthy of vigilance." "That's not necessarily the case." Chen Guiyun said, "Look at the core main sectors such as liquor, white appliances, medicine, electricity, and finance, especially the core leading stocks in the liquor, white appliances, banks, and electricity sectors. They have been shrinking seriously for several months. Qianzhou Moutai, Yangtze Power, Huaguo Bank, Huashang Bank, Minshang Bank... These stocks are almost all stocks with a market value of hundreds of billions or even trillions, but the daily trading volume is not even as good as some mid-cap stocks with a market value of tens of billions. However, the stock prices of these core leading stocks are still setting new highs in the process of continuous shrinking. Even stocks such as Qianzhou Moutai, Wuliangye, Gree Electric Appliances, and Midea Electric Appliances have almost doubled their stock prices compared to the beginning of the year."

"The reason why the core leading stocks you mentioned can continue to shrink for such a long time is that most of the chips of these stocks have been locked up by the 'national team' and a group of concentrated institutions in the industry." Liao Guoxiang said, "But the current chip structure and chip composition of the 'big infrastructure' line have not reached this stage yet, so we must be more vigilant about the continued shrinkage of volume."

"Poly Real Estate, Kewan Real Estate, China Merchants Shekou, China Construction, China Baosteel, Conch Cement, Shenhua Coal... these leading stocks in the core industries of the 'big infrastructure' theme have actually had their internal chips locked up by major funds from all sides, and the trend of continuous shrinking volume has continued." Chen Guiyun observed the market for a while and continued, "Of course, the higher the chips locked up for these stocks, the more conducive it is for the 'big infrastructure' line to continue to ferment."

"I think I should be more cautious with this check from 'Kewan Real Estate', right?" Li Jinshi said after thinking for a while.

Liao Guoxiang pondered for a moment and said with a smile, "Old Li, you are worried that the Baoneng Group, which intervened strongly last year due to the equity dispute of Kewan Real Estate, will flee at a high price and crash the market this year, right?"

"Yes." Li Jinshi nodded. "Anyway, I won't touch any stock that has a potential huge selling pressure or a possibility of major shareholders liquidating their positions."

Although his trading style is relatively aggressive.

However, he also has his own market selection and stock picking logic.

He will not intervene in stocks that do not fit his trading pattern, or stocks with obvious potential positives or risks of major shareholders liquidating and reducing their holdings, no matter how good the fundamentals are or how strong the trend is.

"Will President Yao sell off all of his shares in Kewan Real Estate?" Chen Guiyun asked.

Liao Guoxiang responded: "It's hard to say. The safest way is, as Lao Li said, to avoid such risky stocks."

"But the 'Kewan Real Estate' check is an industry leader that cannot be avoided in the hype of the entire 'big infrastructure' main line market." Chen Guiyun said, "If this check cannot get out of the market and the increase is always suppressed, the trend of other core leading stocks will also be affected, right?"

"I don't think so." Liao Guoxiang said, "The 'big infrastructure' line is very deep and wide. There are many core leading stocks in the industry. If one stock has a potential negative impact and cannot open up the situation, funds will naturally focus on trying to pull up other core leading stocks. As long as other core leading stocks can still form a consistent upward force, then even if the 'Kewan Real Estate' check does not come out, the impact will not be great."

"Haha, I agree." Li Jinshi said, "Among the constituent stocks of the A50 index, some have fallen instead of rising in the past six months, such as many securities stocks. However, the weighted securities stocks have continued to be weak and have continued to fall and adjust. Didn't this affect the A50 index's repeated record highs in the past six months, and the banking sector index and the core leading stocks in the banking sector have continued to rise? I think the principle is the same. Only when a large number of similar stocks have problems with their trends and cannot reach sustained heights, should we pay special attention to vigilance. Of course... Now the 'big infrastructure' line has just truly completed a breakthrough in the previous shock platform. I think it is far from the stage where we should consider the so-called market-making risks."

"At this time, we naturally cannot over-consider the risk issue." Liao Guoxiang said, "When the entire main line sector has actually formed a comprehensive breakthrough, and the certainty of the entire main line market trend has been significantly improved, if the strategy is still biased towards the conservative stage, it is bound to miss a lot of profits."

"Fortunately... we increased our holdings a lot in the early trading session." Li Jinshi said in a good mood.

"I didn't dare to increase my position in Oriental Yuhong," said Chen Guiyun. "I bought some chips in Conch Cement. I feel that this stock has the highest stability among the leading stocks in various industries. It has been breaking through the 20-day line without looking back. In the overall adjustment trend of the main line of "big infrastructure" before, I observed that this stock has the most stable trend."

"The K-line trend of this check is really beautiful." Liao Guoxiang took a look at the K-line trend of the check and couldn't help but praise it at this moment, "It's a typical strong trend stock. Since the outbreak of the 'big infrastructure' line, it has not broken the 30-day line, not to mention that many stocks have retreated to the 60-day line. Moreover, this check has indeed been shrinking for a long time. This trend of shrinking and fluctuating upward along the 20-day line can indeed show that the chips inside this check have basically been locked by the main institutions."

"I personally don't like stocks with such large market capitalizations," Li Jinshi said. "Oriental Yuhong, the leading stock, has higher elasticity and a stronger trend."

Having said that, his gaze once again focused on the two market charts.

Amid the continuous discussion among several people, the market trading time has unknowingly entered the midday closing stage.

And when the market trading time enters after 11 o'clock.

The overall intraday trading volume of the market, as well as the corresponding intraday trading volume of individual stocks, both showed a trend of continuous shrinkage.

Of course, as the volume shrinks over time, the variables in the performance of the main lines of the market are also weakening over time, and the trends of the main lines are becoming clearer and clearer.

Among them, the main trends...

The three core sector indices of real estate, building decoration, and building materials, which are under the main theme of "big infrastructure", have returned to the leading position among all industry sectors in the two cities. They have all risen by more than 2.5%. Even the real estate sector index has risen further to 3% after fully recovering the plunge at the beginning of the session.

As for the main sectors such as Internet software, electronic information, film and television media, which once maintained a leading position and performed extremely strongly before 10 o'clock in the morning.

At this moment, the sector index's growth rate has fallen back to the middle position among all sectors in the market.

The trends of the corresponding core leading stocks and hot concept stocks in the sectors have also shown a significant decline compared to before 10 o'clock in the morning, and the intention of the main buying funds to attack has obviously weakened a lot compared to the beginning of the trading session.

However, even if the overall trend has weakened a bit.

But at least the profit effect of the market is still maintained. (End of this chapter)